Short Sales do not happen in Short Time!

Lenders say they are stepping up their efforts to handle short sales. J.P. Morgan Chase & Co. has doubled the number of employees handling such sales, while Bank of America Corp. recently began allowing real-estate agents to submit short-sale documents online, reducing the chance a sale will be stalled. At Wells Fargo & Co., efforts to speed up short sales helped produce a 145% increase in these transactions in August compared with the same month a year earlier, the bank says. Meanwhile, the National Association of Realtors and other groups have recently launched short-sale and foreclosure certification programs for agents.

New Guidelines
The U.S. Treasury Department is expected to issue streamlined guidelines to lenders on short sales soon. Housing-industry leaders say complicated procedures are hindering them from clearing the large inventory of distressed property necessary to return the housing market to normal. Now, only about 20% or so of short sales are successful

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Avoid Foreclosure! There are alternatives!

Avoid Foreclosure! There are alternatives!

1. Loan modification. Be aware many companies have sprung up which claim to do loan modifications for a fee. Some are legitimate; many are not. Banks are very reluctant to do a loan modification due to an almost 40% subsequent default by the borrower.

2. Short sale is the preferred choice by most banks. They do not want to own any more foreclosures! Call or email for details. 352-547-1086 or Bassobb@kw.com or BobtheRealtor.net

3. Deed in lieu of. Banks are reluctant because they do not want to own more real estate. In many cases, they will come after the borrower for the deficiency.

4. Foreclosure. Last resort in most cases.

5. Bankruptcy. Last resort for severe financial difficulties.

Note a short sale damages your credit but not nearly as bad as a deed in lieu, foreclosure, or bankruptcy. Also, after a short sale, you may qualify to purchase another home in as little as 2 years. Whereas, the last three alternatives can prevent a purchase for 3-7 years.

Short Sales help you avoid foreclosure

Short Sales Help You Avoid Foreclosure!

A short sale means you sell your property for less than what is owed to the bank and the bank takes the loss. You must be able to show a financial hardship and preferably it is your primary residence. A short sale hurts your credit badly but not as bad as a foreclosure. After a short sale you cannot purchase a home again for ~2 years, whereas it is 3-7 years for a foreclosure. The IRS used to tax you on the loss as if it was unrealized income, but there is currently a 3 year moratorium (ends January 2010) on primary residences. In most cases we are able to get a full satisfaction of debt from the bank, so that you do not have any further obligation to them.

Each lender has their own process for handling a foreclosure and/or a short sale. But in general it goes like this. An owner who can no longer afford their mortgage due to job loss, medical or other hardship stops making payments or continues for less damage to credit. The banks sends notices of delinquency to the owners for about 1-4 months and then files legal summons (Lis Pendens or notice of foreclosure proceedings with the county court). Foreclosure usually occurs 12-18 months after the homeowner stops making payments.

To avoid foreclosure, ideally the home owner should list their home for sale as soon as possible after the financial hardship occurs. It is vitally necessary to use an agent well versed in the short sale process. If done correctly the property is priced such that an offer occurs in 1-4 months. If the seller accepts the offer it is then sent to the bank along with the seller’s hardship letter and other documentation to prove the hardship. These documents are very similar to those required when applying for a mortgage. Then negotiations begin with the lender (or lenders when there are other mortgages on the property). Once the bank accepts the offer (1-3 months), then a closing is scheduled very much like in a normal sale.

It usually takes 1-3 months to get an offer. And then it takes 2-4 months to negotiate with the bank. Once the bank accepts, it closes in 15-45 days.

My approach to listing short sales is to price it at or just below market value. Then I reduce the price every 2-4 weeks until I am the lowest in the neighborhood or until I know that the bank won’t take any less.