What is a Short Sale
A short sale is a sale of real estate in which the proceeds from selling
the property will fall short of the balance of debts secured by liens against the property and the property owner
cannot afford to repay the liens' full amounts, whereby the lien holders agree
to release their lien on the real estate and accept less than the amount owed on
the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short
sale agreements do not necessarily release borrowers from their obligations to
repay any deficiencies of the loans, unless specifically agreed to between the
parties.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees
and costs to both the creditor and borrower. While credit is also typically
damaged much less than from a foreclosure, both often result in a negative
credit report against the property owner.
the property will fall short of the balance of debts secured by liens against the property and the property owner
cannot afford to repay the liens' full amounts, whereby the lien holders agree
to release their lien on the real estate and accept less than the amount owed on
the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short
sale agreements do not necessarily release borrowers from their obligations to
repay any deficiencies of the loans, unless specifically agreed to between the
parties.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees
and costs to both the creditor and borrower. While credit is also typically
damaged much less than from a foreclosure, both often result in a negative
credit report against the property owner.
Additional parties
Some junior lien holders and other with an interest in the property may object
to the amounts other lien holders are receiving. It is possible for any one lien
holder to prevent a short sale by refusing to agree to negotiate a reduction in
their payoff to release their lien. (Iowa has a procedure, sale free of liens,
which allows a foreclosure court to "cram down" a short sale over the objections
of the junior creditors.) If a creditor has mortgageinsurance on their loan, the insurer will likely also become a
third party to these negotiations as the insurance policy may be asked to pay
out a claim to offset the creditor's loss. The wide array of parties, parameters
and processes involved in a short sale can make it a complex and highly
specialized form of debt renegotiation. Short sales can have a high risk of
failure from inability to obtain agreement from all parties or they might not be
approved in time to prevent a scheduled foreclosure date.
to the amounts other lien holders are receiving. It is possible for any one lien
holder to prevent a short sale by refusing to agree to negotiate a reduction in
their payoff to release their lien. (Iowa has a procedure, sale free of liens,
which allows a foreclosure court to "cram down" a short sale over the objections
of the junior creditors.) If a creditor has mortgageinsurance on their loan, the insurer will likely also become a
third party to these negotiations as the insurance policy may be asked to pay
out a claim to offset the creditor's loss. The wide array of parties, parameters
and processes involved in a short sale can make it a complex and highly
specialized form of debt renegotiation. Short sales can have a high risk of
failure from inability to obtain agreement from all parties or they might not be
approved in time to prevent a scheduled foreclosure date.
Services and
consultants
In the United States, the Federal Trade Commission and individual states license and regulate debt
negotiators and other consultants who, for a fee, advise borrowers and negotiate
loan modifications with creditors on the borrower's behalf. These consultants
are required by various laws to disclose to borrowers the risks of renegotiating
their mortgages and/or selling their property short. The federal government
sanctions and recommends borrowers use only Department of Housing and Urban
Development-approved non-profit organizations, which do not charge a fee for their services, however,
such services rarely provide short sale negotiation services.
Private debt negotiators, who do short sale negotiations and also charge a
fee for their service, are required in some states to be licensed, obtain a
fidelity bond and insurance. They might also be limited to the amount they can
charge and when these fees are due to be paid by the borrower. In many states
real estate brokers, who handle a short sale application as part of their real
estate services, are often allowed to do so without additional licensing or
insurance.
negotiators and other consultants who, for a fee, advise borrowers and negotiate
loan modifications with creditors on the borrower's behalf. These consultants
are required by various laws to disclose to borrowers the risks of renegotiating
their mortgages and/or selling their property short. The federal government
sanctions and recommends borrowers use only Department of Housing and Urban
Development-approved non-profit organizations, which do not charge a fee for their services, however,
such services rarely provide short sale negotiation services.
Private debt negotiators, who do short sale negotiations and also charge a
fee for their service, are required in some states to be licensed, obtain a
fidelity bond and insurance. They might also be limited to the amount they can
charge and when these fees are due to be paid by the borrower. In many states
real estate brokers, who handle a short sale application as part of their real
estate services, are often allowed to do so without additional licensing or
insurance.
Credit implications
A short sale negotiation resulting in a reduction of the amount a borrower
owes towards a debt acts as a type of settlement or renegotiation of a
borrower's debt. Should the creditor report the debt reduction to credit
reporting agencies, it can adversely affect a person's credit report. Despite
this, damage to one's credit due to a short sale is often much less than that of
a foreclosure. After a short sale, borrowers may find it difficult to obtain a new mortgage as
lender's underwriting guidelines might reject lending to a borrower who has
obtained a short sale in the past.
As of 2011, national and state laws and industry standards for both real
estate sales and lending are in an ongoing and rapid state of change. Borrowers
interested in pursuing a short sale should consult first with a HUD-approved
mortgage counselor for up-to-date and specific advice as it applies to their
situation. Also, borrowers need to obtain up to date information from multiple
professionals, including an accountant, an attorney, and a real estate
broker—all of who specialize in loss mitigation and are licensed to practice in
the state where the real estate is located.
owes towards a debt acts as a type of settlement or renegotiation of a
borrower's debt. Should the creditor report the debt reduction to credit
reporting agencies, it can adversely affect a person's credit report. Despite
this, damage to one's credit due to a short sale is often much less than that of
a foreclosure. After a short sale, borrowers may find it difficult to obtain a new mortgage as
lender's underwriting guidelines might reject lending to a borrower who has
obtained a short sale in the past.
As of 2011, national and state laws and industry standards for both real
estate sales and lending are in an ongoing and rapid state of change. Borrowers
interested in pursuing a short sale should consult first with a HUD-approved
mortgage counselor for up-to-date and specific advice as it applies to their
situation. Also, borrowers need to obtain up to date information from multiple
professionals, including an accountant, an attorney, and a real estate
broker—all of who specialize in loss mitigation and are licensed to practice in
the state where the real estate is located.
Mortgage Forgiveness Debt Relief Act of 2007
The Mortgage Forgiveness Debt Relief Act was introduced in Congress on
September 25, 2007, and became law on December 20, 2007. This act offered relief
to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure.
The act extends such relief for three years, applying to debts discharged in
calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008,
this tax relief was extended another three years, covering debts discharged
through calendar year 2012.)
Normally in US law when a lender decides to forgive all or a portion of a
borrower's debt and accept less, the forgiven amount is considered as income for
the borrower and is liable to be taxed.
However, after the signing of the Mortgage Forgiveness Act, amendments have
been made to remove such tax liability and allow the borrower and lender to work
freely together to find a common solution that is beneficial to both parties.
This protection is limited to primary residences -- rental properties are
ineligible for relief -- so consultation with a tax advisor is necessary to
ensure that a borrower qualifies. The amount of forgiven mortgage debt allowed to
be excluded from income tax is limited to $2 million per year.
More recent legislation provides for a specialized type of refinancing
option, available for mortgages made after 2006, for owner-occupied homes. Under
this program a debtor provides information similar to that necessary for a
short-sale but rather than selling the house to a third-party an FHA guaranteed
loan at a fixed-rate is available if the original lender is willing to write-off
all but 85-percent of outstanding of the debtor's obligations (including
principal, interest, late-fees, prepayment penalties, and all other fees).
FHA-backed refinance packages are available beginning October, 2008, and carry a
fee equal to 1.5% of the value of the house. Debtors who exercise this option
must sacrifice 50-100 percent of equity that builds in a house, and may not
participate in home equity loan programs. This program is only available to
owner-occupied residences. This program requires consent from a lender: consent
is not automatic and may be freely withheld, though withholding consent can
result in a foreclosure with adverse financial results.
As a Realtor I help a lot of homeowners that are under water in there homes.
We have one of the best short sale negotiators in the country. We will make sure
when you short sale your home that the bank will not come after you for the
deficiency thats left on the home. When you get to the point when you know that you cannot continue
making your payments PLEASE call me. When a bank forecloses on your home they will come
after you for the remaining balance. That means you can`t buy anything on credit until that lien is
payed for. There are new loans out there now because of everybody losing there homes, as long as you
are not late in payments for the last 12 months, I can short sale your home in July and you can be in another
home at market value in August !!! Please call me. I would love to help you.
If you would like a free consultation and start the Short Sale process, or you need to stop your foreclosure PLEASE
contact me below.
September 25, 2007, and became law on December 20, 2007. This act offered relief
to homeowners who would formerly owe taxes on forgiven mortgage debt after facing foreclosure.
The act extends such relief for three years, applying to debts discharged in
calendar year 2007 through 2009. (With the Emergency Economic Stabilization Act of 2008,
this tax relief was extended another three years, covering debts discharged
through calendar year 2012.)
Normally in US law when a lender decides to forgive all or a portion of a
borrower's debt and accept less, the forgiven amount is considered as income for
the borrower and is liable to be taxed.
However, after the signing of the Mortgage Forgiveness Act, amendments have
been made to remove such tax liability and allow the borrower and lender to work
freely together to find a common solution that is beneficial to both parties.
This protection is limited to primary residences -- rental properties are
ineligible for relief -- so consultation with a tax advisor is necessary to
ensure that a borrower qualifies. The amount of forgiven mortgage debt allowed to
be excluded from income tax is limited to $2 million per year.
More recent legislation provides for a specialized type of refinancing
option, available for mortgages made after 2006, for owner-occupied homes. Under
this program a debtor provides information similar to that necessary for a
short-sale but rather than selling the house to a third-party an FHA guaranteed
loan at a fixed-rate is available if the original lender is willing to write-off
all but 85-percent of outstanding of the debtor's obligations (including
principal, interest, late-fees, prepayment penalties, and all other fees).
FHA-backed refinance packages are available beginning October, 2008, and carry a
fee equal to 1.5% of the value of the house. Debtors who exercise this option
must sacrifice 50-100 percent of equity that builds in a house, and may not
participate in home equity loan programs. This program is only available to
owner-occupied residences. This program requires consent from a lender: consent
is not automatic and may be freely withheld, though withholding consent can
result in a foreclosure with adverse financial results.
As a Realtor I help a lot of homeowners that are under water in there homes.
We have one of the best short sale negotiators in the country. We will make sure
when you short sale your home that the bank will not come after you for the
deficiency thats left on the home. When you get to the point when you know that you cannot continue
making your payments PLEASE call me. When a bank forecloses on your home they will come
after you for the remaining balance. That means you can`t buy anything on credit until that lien is
payed for. There are new loans out there now because of everybody losing there homes, as long as you
are not late in payments for the last 12 months, I can short sale your home in July and you can be in another
home at market value in August !!! Please call me. I would love to help you.
If you would like a free consultation and start the Short Sale process, or you need to stop your foreclosure PLEASE
contact me below.
Mark Petrillo
Coldwell Banker/Tony Hubbard Realty
1795 East Highway 50
Clermont, Fl 34711
[email protected]
352-504-5780
http://soldbymark.mfr.mlxchange.com
Coldwell Banker/Tony Hubbard Realty
1795 East Highway 50
Clermont, Fl 34711
[email protected]
352-504-5780
http://soldbymark.mfr.mlxchange.com