A short sale may be a way out- but beware

Some homeowners who sell their homes through short sales are finding their mortgage companies still try to collect some or all of the difference between the bank-approved short-sale price and the outstanding mortgage balance.  Some mortgage companies also are taking legal action to recover unpaid amounts after a foreclosure is completed.

•   A lender tactic gaining popularity is for the holders of mortgages or home-equity loans to require borrowers in short sales to sign a promissory note — a written promise to pay back a loan or debt.
• HSBC Finance has implemented a one-year moratorium on the collection of deficiency balances for short sales and foreclosures that occur after April 1, due to the “current economic environment,” according to an official with the company.
• Not all borrowers who sell their homes through a short sale or lose their homes to foreclosure will receive a deficiency claim.  Often, mortgage companies don’t try to collect unpaid amounts either because state laws prohibit or limit such actions or the cost outweighs the potential return.  California has anti-deficiency rules that prohibit lenders from pursuing borrowers after foreclosure, but California does not have anti-deficiency rules for a short sale.
• The borrower’s situation often is the determining factor in whether the lender tries to collect the unpaid debt or not.  The borrower’s employment status, assets, whether the home was purchased as an investment, and the amount of debt owed are taken into consideration.
• It is important that sellers are informed of the lenders requirements, read the fine print, and ask questions when selling their home via a short sale.  According to one real estate attorney who represents financially troubled homeowners, every short sale she has worked with has had a promissory note or terms giving the lender the right to collect a deficiency.  Often, the terms are buried in the sale contract, according to the attorney.

It is important that you work with a Realtor that has knowledge about short sales before you decide to work with them. Also it is important to talk to a Real Estate Attorney before you decide to sell so you get advice for your situation.

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 The Home Team Girls Realtors® Real Estate Team helping you with Investment properties, Homes For Sale, Relocations, Seller Strategies, Certified Buyer’s Agent, Serving the Military and Veterans, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.

Snag a deal on a short sale

As more homeowners find themselves underwater — owing more on their mortgage than their home is currently worth — and unable to make the monthly mortgage payments, many are turning to short sales, which allows a homeowner to sell their home for less than owed on the mortgage. With the lender’s approval, home buyers can purchase properties in desirable neighborhoods and at favorable prices.

KEEP THIS IN MIND

 
• According to real estate Web site Zillow.com, 14 percent of homeowners nationwide are currently underwater. In some areas, especially those hardest-hit by foreclosures that have experienced the greatest price declines, more than 50 percent of homeowners would owe more than their home is worth if they sold today.
• Unlike foreclosed properties, which may be run-down and vacant for many months, short-sell properties are likely to be better maintained as many owners may still live in the home.
• In a short sale, the homeowner must receive approval from the lender before the sale of the property can proceed. With many lenders overwhelmed by short-sale transactions, it can take between two and six months to execute.
• Working with a REALTOR® who has experience with short sales can help both sellers and home buyers during the transaction. A seasoned REALTOR® will be able to serve as the mediator between the seller and the lender and lead to a successful transaction, while a buyer’s agent can help with offers, counter offers, home inspections, closing, and more.
• It is important to remember that although the seller may be anxious about selling the property and willing to accept any offer, it is ultimately up to the lender to determine if, and at what price, the property can be sold. Therefore, home buyers should work closely with their REALTOR® to submit a realistic offer.
• According to REALTOR® Loni Parmelly, author of Success in Short Sales, buyers should ask the lender to pay for all closing costs as part of the contract. The contract also should specify that the buyer will not conduct an appraisal or inspection of the property until the offer is approved. This
added guarantee can protect home buyers from spending money on a home they may not purchase.
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For more articles:

A Short Sale May be a Way Out… But Beware

Questions on the 8,000 Federal Tax Credit

 

The Home Team Girls Realtors® Real Estate Team helping you with Homes For Sale, Relocations, Seller Strategies, Certified Buyer’s Agent, Bank Foreclosure Specialist, Short Sale Specialist. We use the service of a certified  Home Stager on all of our listings. For Roseville and Sacramento Realtor Services call on the Home Team Girls.