FAQ

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Is your mortgage payment eating away your savings?

Do you want to sell your property but you owe more than it is worth?

Are you behind on your mortgage payments or facing foreclosure?

Are you in a financial hardship that won’t allow you to continue making the full amount of your mortgage payment?

Going through a divorce and can’t keep your home?

Do you need to move soon?

 

What is a Short Sale?

A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy the loan. The best part, the existing lender pays virtually all sales costs, including commissions, your attorney’s fees, title fees and property taxes. You get your home sold, the loan(s) paid off and you avoid foreclosure.

If I do a Short Sale, how much will I have to pay to sell my home?

NOTHING! It’s true, in almost all cases you will pay literally no sales costs if your lender approves the Short Sale. All commissions, title and attorneys fees, and even most other property expenses like property taxes are paid by the lender as part of the Short Sale approval. We will include the following clause in the contract: “Seller’s agreement to sell is subject to approval by existing lender of a Short Sale at no cost to Seller.”

We work with attorney’s who will not send you a bill!

Why should I choose you to help me instead of my neighborhood realtor?

Here are just a few reasons why…

  • We have been in your shoes and had to short sell our dream home and some investment properties. We understand you!
  • We know the most important thing is to get the waiver of deficiency so the bank won’t be suing you after you have sold or left your home.
  • We know that an attorney’s office gets a much better response than a realtor so we have attorney’s we recommend that will negotiate your short sale. Our attorney will not charge you; they will have the lender pay them.
  • We have successfully closed many short sales and we have the SFR designation from the National Association of Realtors ( SFR- Short Sale & Foreclosure Resource)
  • We promise to be discreet, if you prefer we will not even post of “for sale” sign on your property.

I am current on my mortgage, will my lender consider a Short Sale

The answer is, maybe. Some lenders will accept a Short Sale file for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent. We can put your Short Sale file together within a couple days and submit it for approval. (Remember, there is no charge for this). That is the best way to determine if your lender will accept a file for approval on a loan that is current. HAFA is a program that might work for you!

Will I get any Money from the sale of my property?

MAYBE! As part of the newly implemented Home Affordable Foreclosure Alternative (HAFA) plan, qualified home owners can get up to $3,000 as a relocation expense! There are also several different incentive programs available outside of HAFA. For example, on one short transaction I was a party to, the seller was given $20,000 by the lender and also full debt forgiveness! It’s rare but it happens!

What are the advantages of a Short Sale?

There are many advantages! The biggest advantage, in my opinion, is the possibility of being able to  walk away from your mortgage debt and get a fresh start! In most cases, the bank issues a waiver of the deficiency, meaning they agree not to sue you for the amount of money they take a loss on! Please be aware that in most Illinois foreclosures, the bank has the right to pursue you for the deficiency judgment and if they get that judgment they can garnish future wages!

Some other advantages are:

Your Credit Score: Foreclosure will lower your score much more than a Short Sale. In addition, a Foreclosure will remain as a public record permanently and on your personal credit history for up to 10 years.

Buying a Home Again: A homeowner who loses a home to foreclosure is ineligible for a most mortgage loans for 4-5 years. A homeowner who has a short sale successfully negotiated will be eligible for an FHA or Fannie Mae backed loan in as little as 2 years.

Can I Stay in my Home? How long will this take?

Yes, you can remain in your home. The short sale process is not quick process and it usually takes several months until approval. Once the short sale is approved, you will have to move but you will know this date more than a month in advance. You can stay in your home during this time and we will assist you in finding a new place to live.  We are landlords ourselves and we can give you some great ideas on how to approach other landlords that will give you a favorable chance should you choose to rent your next home.

What are the tax consequences in doing a Short Sale?

When a bank agrees to a short sale, they will send you a 1099 for difference between what you owed and what is sold for. The Mortgage Debt Relief Act of 2007 was enacted to help people who participate in a short sale on their PRIMARY residence. If you qualify, you will not have to pay tax on this money! This Act was just extended until 12/31/2013. Please consult your accountant for further explanation and get legal advice on this matter. In some situations, there could be tax consequences but normally if it is your primary residence you will be exempt.

What will I need to provide during the Short Sale?

Your lender will need a package that usually includes:

  • A financial statement form the lender will provide.
  • Your last 2 years of Federal tax returns with W2’s or 1099’s.
  • Your last 3 months of bank statements.
  • Your last 2 pay stubs, if any.
  • A hardship letter.

The lender may also request updated documents during the process.  The leading cause of denial or delays is caused by the seller failing to provide these documents in a timely manner.  We will have the attorney’s office work closely with you on this and we will be there to assist you and answer your questions 7 days a week!

What if I am too far behind in payments and the Bank is threatening to foreclose?

We may be able to get the bank to postpone the foreclosure.  Just starting a short sale listing will not automatically stop the foreclosure but we do have a good chance of getting the sale date postponed by listing the home for sale and getting a purchase offer.

Will my neighbors and friends know that I did a Short Sale?

We understand you may not want your friends and neighbors to know about the short sale. We promise to be discreet and if you prefer, we do not have to post a “for sale” sign on your property.

What happens if my lender declines my short sale? Can I offer anything to make it work?

If you show a large surplus of income after expenses OR a large amount in savings, they may not approve the short sale, or they may ask for a small seller contribution. If you need any help with this, or have questions, please feel free to call us so we can diagnose your situation. We have been successful in these situations where the seller was asked for a contribution and successfully closed there short sale.

 What if my home is worth more than what I owe but I just can’t afford to pay all the closing costs?

That can still be a short sale, please call us to discuss your options.

What is a HAFA Short Sale?

The US Federal government introduced the HAFA program in 2010 to ease the foreclosure crisis and to allow homeowners to sell their home at a loss with no deficiency judgments to the homeowner on “principle residence”. If approved, our team will negotiate with your lender to enter the HAFA Program “Home Affordable Foreclosure Alternatives”. This will help avoid the often costly foreclosure process to the lender and allow you stay in your home while the short sale is in process. The HAFA program is at no cost to you and you maybe eligible for a monetary incentive for relocation expenses. (Yes, money to you, up to $3,000.00)

The goal of HAFA is helping borrowers and an alternative way in avoiding foreclosure. A short sale or deed-in-lieu (DIL) is the best choice for both the lender and the borrower because the home will maintain its value better when occupied, and the borrower gets fully released of the debt. If you were not able to get your loan modified, this is the best option for you since a foreclosure or bankruptcy may affect your credit for up to 10 years. You may also receive up to a $3,000.00 incentive at closing in addition to full debt forgiveness!

  • Property is principal residence.
  • Mortgage originated before Jan. 1, 2009.
  • Mortgage is guaranteed by Fannie Mae or Freddie Mac. (This is not who you make payment too, we will check on this for you.)
  • Borrower is delinquent or default is foreseeable. (You do not have to be currently behind on your mortgage)
  • Homeowner demonstrates financial hardship. (i.e. job loss, job relocation, reduced income, divorce, illness, increased expenses, increase in property taxes, etc)
  • Borrower’s total monthly housing payment exceeds 31 percent of gross income.
  • Unpaid principal does not exceed $729,750.

 Is a Short Sale right for me?

Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure. Bottom line, your lender wants to work with you.

How do I get started on a Short Sale?

There is no charge to you to get started. It is as simple as contacting us and we will get to work.

Why would my lender agree to accept my Short Sale?

There are actually several reasons why a mortgage company would approve a Short Sale payoff;

Legal Concerns – Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to work towards a solution

Wall Street is Watching – Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender’s ability to sell their loans on the secondary market. A successful Short Sale gets the loan payoff resolved quickly.

Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets – homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Short Sale eliminates most of these costs

Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful Short Sale lets the lender put more money to work.

Do lenders approve all Short Sales?

In a word, no. That is why it is critical to work with Realtors & Attorney’s that have extensive experience at getting Short Sales approved. From the presentation of the Short Sale package to the lender to working with the lenders Loss Mitigations Department, we know how to keep the file moving towards approval. The first step is to get pre-qualified for a Short Sale. There is no charge for this, and it’s easy to do. Just Call Melissa (847) 922-0617

I have two loans; can I still do a Short Sale?

Yes. We can work with both lenders (many times the same lender hold the 1st and the 2nd loans) to put together a Short Sale transaction. Even if the value of your home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate. In the end, neither lender wants to own another home through foreclosure.

I am concerned about my credit, how will a Short Sale affect my credit?

The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is one of the most damaging events your credit status can encounter – worse than bankruptcy. In the course of getting your short sale approved if you miss your mortgage payments that will show on your credit report.

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly.

What is a Deed in Lieu?

This is when the homeowner volunteers to turn the property over to the bank. If a lender is willing to accept this, it may be a fast solution. On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, and the bank can then get a deficiency judgment and collect it from you. Many times banks are reluctant to accept this and want to make sure you tried all other options like a short sale. From our experience, usually banks will want to know that you tried to process a short sale before considering a deed in lieu of foreclosure.

Why do the banks allow a Short Sale?

First of all, the foreclosure process is an expensive one for the bank. The process is long and as the bank is not getting payments from the homeowner during the entire process, hefty attorney fees are incurred. Once the property is foreclosed on, the bank new has to list the property for sale, take proper care of holding costs and maintenance costs to avoid liabilities and fines. These homes are by then often times in need of repairs ( for example; if the power is shut off before the bank gains access, the sump pump does not have power and you can imagine the damages, this is very common). A judgment for the deficiency amount including fines and penalties may be obtained, incurring more legal fees, and many times these are very difficult to collect as one must assume that the homeowner is going through some kind of hardship, has no money or assets and many times has to resort to bankruptcy. Foreclosures on average cost the banks much more money than a short sale.

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