Foreclosure Assistance Fort Lauderdale, FL | Avoid Foreclosure & Loan Modification

Short Sale vs. Foreclosure


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A Short Sale transaction occurs when market and financial conditions force a property owner to sell their property for less than what is owed on the mortgage and the lender is willing to accept less than full amount as payment in full. Although it sounds like the perfect out, your decision to enter into a short sale transaction should not be made lightly. The best strategy under any conditions is to continue paying your mortgage, wait for the market to correct, let your property appreciate and sell your house when the value has returned.		You need Adobe Flash Player 9 to view this widget. Short Sale Introduction A Short Sale, as the name implies, is an agreement between the owner of a home and the lender to accept an offer for less than the total amount owed to pay off the loan. It usually occurs when the current homeowners can no longer afford the mortgage payments on their property and the lender decides that selling the property at a loss is better than the alternative of a foreclosure. Losing your home to foreclosure could seem like a devastating experience. However, mortgage challenges happen to a lot of people – sometimes its due to a job loss, serious illness, a major accident, or divorce. Sometimes people decide to pursue a short sale if they have been denied for a mortgage modification, are still having trouble making their mortgage payments, or if their home is worth less than the amount of the mortgage. What happens in a short sale is that the lender lets you sell the home for LESS than the amount of the mortgage. Although it sounds like the perfect way out of a tough financial spot, your decision to enter into a short sale transaction should not be made lightly. It’s a serious situation, and requires a lot of work by you, and by the buyer of your home, as well as the realtors and other parties involved in the transaction. Also, the approval to execute the short sale must come from both the first lien holder, and any second lien holder as well. So, its important to remember that the short sale is not a fast process, but its one that can be accomplished if you begin the short sale with the lender early on, when you are first trying to sell the home. But if you can accomplish a short sale, there are substantial advantages to you rather than simply letting your home be foreclosed on. These benefits of a short sale include: You retain more control of the process and the timing of the sale of the house The long term financial impacts are reduced You can receive short term financial benefits as well The government has recently created a series of benefits and a new process for streamlined short sales that may help you. You are encouraged to understand how this process works as you explore your options. How Does a Short Sale Work? Pre-Sale— The lender will start by approving a list price for your home or give you the acceptable sale proceeds. This is the minimum amount that the lender must receive from the sale of the home. The lender will also identify the sales costs, which includes the Realtor or Broker Commissions and closing costs that may be deducted from the final sale price. It is important to remember that a Short Sale has to be coordinated with both the FIRST mortgage lender, AND any secondary lien holder that may exist. You then list your property like any home sale with a local real estate broker, at the approved price. When you get an offer on your home, you submit the required documentation and the lender will approve the sale if it conforms with the price and other terms established in the PreSale agreement. Once the sale closes, the Lender will release you from all responsibilities of repaying your mortgage balance. Please note that other lien holders, like your second mortgage lender, or HomeOwners Association also have to agree to a certain amount. So, after the sale is complete, you will receive $3000 to help pay some of your moving expenses. The check will be paid to you by the settlement agent as part of the closing. Homeowner Responsibilities During the short sale, each party has specific responsibilities. Here is a quick summary of the homeowner’s responsibilities during the Short Saleprocess: 1. If you are approved for the Short Sale Program, you should carefully review the approval letters and return to the lender with the information requested. This is an important document so be sure to review promptly and be sure you understand all the requirements. 2. You need to keep your house and your property in good condition and cooperate with your Realtor or Broker to show it to potential buyers. 3. In some cases, you may be asked by the lender to make partial mortgage payments until your house is sold and title is transferred. While you are selling your house, you still legally owe the full amount of your current monthly mortgage payment. 4. Be able to provide the buyer of your home with clear title. To start, determine if you have other loans, judgments or liens secured by your home, such as a home equity line of credit or a second mortgage. You may also owe money for home owners association dues. If these liens exist, you will need to either pay these loans off in full, or negotiate with the lien holders to release them before the closing date. You can get help from your broker or Short Sale professional to negotiate with the other lien holders. If you have these types of liens or loans on your home, please gather any paperwork you have, such as your last statement-- and send it to the lender when you return the signed Agreement. 5. At several stages of the short sale process, such as after an offer is received, you will need to complete some paperwork. After the Short Sale is complete, there are a few things to keep in mind. These involve tax issues and credit issues that you might experience. Tax ISSUES: The difference between the remaining amount of principal you owe and the amount that the lender receives from the sale must be reported to the Internal Revenue Service as debt forgiveness. The IRS rules changed in recent years, allowing you to avoid tax on this forgiven debt in most cases. Also, the amount that you receive for “relocation” expenses may also be reported as income. It’s suggested that you contact the IRS or your tax preparer to determine if you may have any tax liability. CREDIT: The lenders will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment. This will impact your credit rating, although its typically less severe than if your home is foreclosed. Please note that the short sale is typically not a fast transaction to complete, but it’s one that can be accomplished if you begin the short sale with the lender early on, when you are first trying to sell the home. This free sample "Short Sale" video available from flsvideo.com

Losing your home to foreclosure due to an inability to pay your monthly mortgage payments is one of life’s most unpleasant experiences. However, occurrences such as serious illness, a major accident, and divorce or job loss can happen to anyone. If you find yourself in this situation, a Short Sale could be your best option to prevent foreclosure.

The inevitable result of a foreclosure is the lender taking your home. Not only will you lose your home, but the lender can get a judgment against you for the arrearages you owe plus his cost for the foreclosure action. If that isn’t enough, your credit report will be in terminal condition for many years to come, worsening an already bad financial situation and making it very difficult to obtain any other kind of credit. There is no upside to foreclosure. It should be avoided at all costs.

Short Sale	\|	Foreclosure


Property is sold and lender accepts proceeds as payment in full	vs	Lender takes title and forces sale of the property


Depending on the type of loan some lenders who accept a short sale may be able to pursue a borrower for a deficiency judgment. In many successful short sales it is possible to convince the lender to give up this right as part of the short sale	vs	In many states, depending on the kind of loan, the bank has the right to pursue a deficiency judgment. *Not in the Sate of Washington, unless the foreclosure has been filed with the courts


No foreclosure reported to credit bureau if you get successful foreclosure help	vs	A foreclosure will be reported to your credit bureau


Short sale is not reported on a credit history. There is a no specific reporting item for “short sale.” The loan is typically reported “paid in full, settled” if you obtain foreclosure assistance in time.	vs	Foreclosure will remain as public record on a person’s credit history for 10 years or more


FICO score may drop between 75 – 125 points	vs	FICO score may drop between 200 – 280 points


If you get foreclosure assistance, a short sale on its own, does not challenge most security clearances	vs	Outside a conviction for a serious misdemeanor or felony, foreclosure can be one of the most challenging issues against a security clearance. If a client has a foreclosure and is a police officer, in the military, CIA, or any other position that requires a security clearance, in most cases clearance will be revoked and the position will be terminated


A short sale is not reported on a credit report and is therefore not a challenge to employment	vs	Employers have the right to check the credit of all employees who are in sensitive positions. Those who had a foreclosure may be grounds for immediate reassignment or termination

In 100% of foreclosures (except in those states where there is no deficiency), the bank has the right to pursue a deficiency judgment or write off the debt and have the IRS send you a 1099c that you have zero control of if you avoid foreclosure help.	vs	In some successful short sales, it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.
Negotiated Promissory Note with a Short Sale vs Deficiency Judgment with a Foreclosure
Many are asking us whether the seller should agree to a negotiated promissory note in a short sale or allow the house to go to foreclosure. While this is a highly discussed issue in today’s marketplace, it really is a very simple decision. My view is that a negotiated promissory note is ALWAYS better than a deficiency judgment resulting from a foreclosure. Here is why: Deficiency Judgment: The foreclosure judgment will be something you MUST disclose on any application regarding your background. It will be present on your credit report and will hurt you whenever credit is a factor in a decision, including getting a job. A deficiency judgment is a monetary judgment. Thus anything you purchase could be attached by the Lender, be it an automobile, jewelry or a new swing-set for your kids. Your wages can be garnished. Your bank accounts can be frozen and attached, without any advance notice. You will be subject to periodic depositions in aid of execution and have to provide copies of all of your financial matters, several times a year. If you repeatedly don't show up for these proceedings, the court can hold you in contempt and even put you in jail (YES - JAIL!!) until you comply. In Florida (check other states) you can enjoy each of the above for 20 full years before the judgment is no longer enforceable. The judgment usually carries interest. Check your state for the rate. For judgments rendered in 2009, the statutory rate in Florida is currently 8%. Fannie Mae underwritten mortgages cannot be obtained until 5 years after the foreclosure judgment. Negotiated Promissory Note: You pay an agreed amount according to the promissory note, which is usually monthly and often at no interest. If you no longer can pay the note, you may be able to negotiate a new payment amount or abate payments, for a period of time. You may be able to re-negotiate the terms of the promissory note in the future. The promissory note is not a judgment so it does not show up on the credit report. If a foreclosure suit was entered, even if it went to a foreclosure judgment (but not a sale), the lender will likely dismiss the suit and vacate the judgment, clearing your record, even before you start paying on the promissory note. If you stop paying on the promissory note the note holder can then seek a monetary judgment for the unpaid amount. FANNIE-MAE underwritten mortgages can be obtained after a short sale in just 2 years. Once you repay the promissory note the lender should remove any derogatory credit report postings concerning the negotiated payoff of the mortgage, instantly repairing your credit score. If you have additional questions, contact Stephen Weiss, Senior Vice President. His email is sweiss@joinfrt.com. Stop Foreclosure Short Sale Benefits Short Sale Qualifications

Do you need foreclosure assistance?

Short Sale Introduction

How Does a Short Sale Work?

Homeowner Responsibilities