Posts Tagged ‘short sale’

What’s in a Short Sale Packet?

Posted in Short Sales/Foreclosures on July 28th, 2010 by Anna Stout – 3 Comments

Once a Seller has decided to negotiate for a short sale, the next step is to know what goes into the Short Sale Packet because the majority of the information to be included will come directly from the Seller. Therefore the Seller must be cooperative and willing to undergo the data gathering process, which can be time consuming and often frustrating. It’s also important to note that each Lender has specific package requirements and it is imperative that the package be submitted accordingly. The following are items to be included in the Short Sale Packet as a request for consideration of short sale:

• Short‐sale cover letter – this is a one page overview of what you are requesting  and what is contained in the packet.

Authorization Letter– this gives the Lender permission to provide information to the Agent pertaining to the Seller’s mortgage

 • Seller’s financial information:

  • Most recent pay stubs – 2 months (for W-2 wage earners)
  • Most recent Bank Statements – 2 months, all pages
  • Information regarding employment – length of service
  • Profit and Loss Statement/Audited YTD Income Statement – (if Self employed)
  • Income and Expense Sample Form
  • Most recent (2) years’ Completed Tax Returns –(personal and/or Business, all signed pages)
  • Four (4) months Business & Personal Bank Statements –( if Self employed)
  • Asset documentation – i.e. Savings accounts, Stocks, Bonds, CDs, 401K, Pension plans, other Retirement funds (all pages)
  • Supporting financial hardship documentation – i.e. medical bills, unexpected expenses
  • Copy of Insurance Declaration page
  • Recent property tax bill – proof of payment
  • Proof of payment of Homeowner’s Association Fees (if applicable)
  • Rental Income with Agreement if non-owner occupied
  • Completed, signed and dated Request for Consideration of Short Sale Form from Lender
  • Completed 4506T-EZ, signed and dated – form allowing the Lender to get a transcript of filed Tax Return

• How to Write a Hardship Letter – this is a letter explaining how and why the Seller became delinquent on payments.  This should be sincere and honest.

 Information from the Agent:

 • Listing Agreement

• Marketing history – MLS printout (with appropriate language and disclosures for a short sale) showings and feedback reports

• Repair estimate for the property, if repairs are required

• CMA -with supporting sales history, including REO comps

• Purchase contract signed by both the buyer and seller

• Copy of Earnest Money Check

• Written proof of the buyer’s ability to purchase the property (preapproval letter, or proof of funds, if cash transaction)

• HUD‐1 settlement statement (sometimes Title company will prepare)

• Preliminary title report

If there is more than one loan on the property, the process has to be repeated and payoffs provided to each lien holder.

To avoid duplication, sometimes agents wait till after they have an offer to submit the packet, since the Lender wants current docs from the contract date.

If you would like to discuss the possibility of a Short Sale, please feel free to contact me at:

Reasons for Short Sale

Posted in Short Sales/Foreclosures on July 20th, 2010 by Anna Stout – Be the first to comment

  

Often Sellers think that foreclosure is inevitable and their only option when they have difficulty making mortgage payments. They don’t know which way to turn or their choices. Before resigning to foreclosure, one solution may be for Sellers to consider listing their home for sale as a short sale. There are several combining factors which may determine whether a Seller’s property should be considered for a short sale. If the answer is Yes to the following questions, one may want to pursue this option:

  • Are you having difficulty making your monthly payments or facing foreclosure?

If you are having trouble making mortgage payments and refinancing or loan modification is not an option, short sale can help avoid foreclosure. A short sale may be considered once a Seller falls 1-3 months behind in payments. When a Seller is 60 days behind in payment, the Lender usually sends a notice of intent, which is a formal notice to the Seller of the intent to seek specific relief in an action.  It is notification of the intent to begin the foreclosure process, in this case.

  •  Do you owe more on your property than it is actually worth?

If the amount you owe on your mortgage exceeds the current market value of your home, short sale may be a good option because it allows the home to sell for less than what you owe. Property depreciation alone does not qualify you for a short sale; other factors must also be considered.

  •  Do you need to get your home sold quickly? 

If you are in a “must-sell” situation along with being behind on payments and owing more than the home’s value, short sale may bring you a buyer quicker and help you sell before reaching foreclosure.

  • Are you having a financial hardship?

Sellers may qualify to sell their property in short sale if they have faced a recent financial hardship.

Hardships include:

Job loss

Business failure

Divorce

Death of Spouse

Major Illness

Medical expenses

 

If you have any other questions about a short sale and would like guidance, please feel free to contact me.

To search for short sale homes in Carmel-Westfield visit: 

 

Alternatives to Foreclosure

Posted in Short Sales/Foreclosures on July 12th, 2010 by Anna Stout – 7 Comments

Stop foreclosure

When Sellers have difficulty making mortgage payments, they often think that foreclosure is inevitable and their only option.  They don’t know which way to turn and don’t know that they have options. Before resigning to foreclosure, here are some alternatives that might be considered:

 

  •  Loan Modification – the Lender agrees to amend the existing mortgage i.e. terms, interest rate, as a means to help the Seller avoid foreclosure. 

 

  • Bankruptcy the Seller liquidates debt
    • Chapter 7 (Liquidation) Settles personal debt.
    • Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts within 3 – 5 years.
    • Chapter 11 (Business Reorganization) A solution for business debt

 

  • Forbearance – the Lender makes special arrangements with the Seller based on their specific financial situation, which may enable them to handle more affordable payments.  This arrangement could include payment reduction and sometimes even suspension of payments.  The Seller has to prove to the Lender the ability to meet the new payment arrangement.

 

  • Deed in Lieu of foreclosure – this occurs when the Seller gives the property back to the Bank. It’s not as easy as a Seller just throwing up their hands and saying, “here just take it”.  Banks consider the market condition, rather it is a declining market or not, foreclosure timeline and the condition and expenses associated with the home.

 

  • Reinstatement – the Seller can pay off the full amount in default, plus fees.

 

  • Sale – the Seller sells the home without Lender approval. This usually happens if the Seller has equity and assets to be able to cure any deficiencies at closing.

 

  • Short Sale – a short sale is basically comprised of two main components.  The first is the listing, marketing and selling of the home.  The second involves negotiations between the Seller and their Lender. In some instances this can happen simultaneously. The Seller’s goal is to have their mortgage lender agree to accept the proceeds from the sale of the home as payoff of their balance due.   

 

Keep in mind, anyone in this position should always consult with an attorney who specializes in this area as well as a tax professional.  If you have questions or would like more information, please visit:  www.CarmelWestfieldHomes.com

What’s the difference between a short sale and a foreclosure?

Posted in Short Sales/Foreclosures on July 8th, 2010 by Anna Stout – 2 Comments

With the housing bubble burst and a weak economy, more and more homes have gone into short sale or foreclosure. Although this is an unfortunate and often devastating situation for Sellers, short sales and foreclosures can be a good deal for Buyers. So, what exactly is the difference between a short sale and foreclosure? Here’s a quick snapshot of both:

Short Sale—a short sale is basically comprised of two main components.  The first is the listing, marketing and selling of the home.  The second involves negotiations between the Seller and their Lender. In some instances this can happen simultaneously. The Seller’s goal is to have their mortgage lender agree to accept the proceeds from the sale of the home as payoff of their balance due.  For example, if a Seller owes $250,000 on their mortgage and the sale of the home nets $215,000, the Lender or Bank will agree to take the net proceeds of the sale as the payoff of the outstanding debt. Notice, I mentioned net proceeds.  Banks only care about the bottom line! The Bank’s goal is to get bad loans off their books so they can reinvest the monies and make more loans.

Foreclosure—foreclosures happen when a Lender attempts to recoup any money owed on a defaulted loan. In a foreclosure, the Lender takes possession of the home after the owner defaults on the loan. The lender then attempts to sell the property, commonly known as a “bank-owned” or “REO” property.

In later posts, we’ll discuss in more depth some reasons for short sales, the process, the package, and answer some questions regarding short sales.

If you are considering a short sale, the very first step is to consult with an attorney and CPA who specializes in this area.

To view short sale listings  in Carmel/Westfield, IN visit:

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