When a Trustor can no longer pay a loan in full, what often follows is foreclosure or even bankruptcy. This is a very depressing financial situation, but it can be solved with a little known alternative: the short sale.
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
State laws vary, so consult your real estate lawyer to determine if your loan and case qualifies for a deficiency judgment or claim for a short sale.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
The tedious process of securing a short sale is sure to take a very, very long time. 21 days is the usual answer, should you ask the lender. But that's just a minimum, some cases may actually take twice that time to get approved.
Short Sale Strategy Overview
How the Short Sale works:
The Contract: The contract can be of any variety-a one page, a nine page, a board of realtors' version, or any generic type of purchase and sales contract. However, at any point in the contract in which price is mentioned, you should fill in the phrase: "See Addendum."
The Addendum- Your Most Important Tool
The basic document that contains nearly all vital info on conducting the transaction is contained in the addendum:
Info on the origin of the contract for short sale
The Date
The names and other info pertinent to the parties involved
Address
Tip: It's advised to list both the legal address and the simple address in the addendum -for the purposes of clarity and transparency.
Any good investor should be aware that a short sale is a good way to peruse quality bargain real property -a case in which a short sale is actually more financially reasonable than outright foreclosure. - 23309
Short sale is usually the last step taken by the bank to recover losses from a defaulted mortgagor. When lenders agree to a short sale, it means the lender agrees to accept less than the total amount due. They are willing to forgive a certain amount of debt or deficiency. However, not all lenders will accept a short sale or discounted payoffs, especially if it would make more financial sense to foreclose.
State laws vary, so consult your real estate lawyer to determine if your loan and case qualifies for a deficiency judgment or claim for a short sale.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
The tedious process of securing a short sale is sure to take a very, very long time. 21 days is the usual answer, should you ask the lender. But that's just a minimum, some cases may actually take twice that time to get approved.
Short Sale Strategy Overview
How the Short Sale works:
The Contract: The contract can be of any variety-a one page, a nine page, a board of realtors' version, or any generic type of purchase and sales contract. However, at any point in the contract in which price is mentioned, you should fill in the phrase: "See Addendum."
The Addendum- Your Most Important Tool
The basic document that contains nearly all vital info on conducting the transaction is contained in the addendum:
Info on the origin of the contract for short sale
The Date
The names and other info pertinent to the parties involved
Address
Tip: It's advised to list both the legal address and the simple address in the addendum -for the purposes of clarity and transparency.
Any good investor should be aware that a short sale is a good way to peruse quality bargain real property -a case in which a short sale is actually more financially reasonable than outright foreclosure. - 23309
About the Author:
Know about short sale an alternatives to bankruptcy or foreclosure only at Don Burnham's website http://www.weknowthewayback.com. Visit today to know all about short sale!
No comments:
Post a Comment