Short Sale Solution
What is a Short Sale?
A short sale is the sale of real property in which a lender allows the secured property to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan.
Short Sale Introduction
Over the past several years, lenders made loans in amounts and with adjustable rates that became too burdensome for borrowers to repay. Many of these homeowners are no longer able to fulfill their mortgage obligations. When a homeowner is no longer in a position to make the mortgage payments, is facing foreclosure and the current market value of the property is less than the loan on the property, the homeowner may consider a short sale. The short sale prevents having the foreclosure on the borrower's credit history, and releases the borrower from an obligation that he or she can no longer afford. From the lender’s perspective, it saves the expenses of foreclosure proceedings and from having another property on their books.
Short sales are subject to a lender's approval by consenting to a sale of the security interest for less than what is owed on the note and accepts the proceeds in full satisfaction of the loan amount. A short sale requires much paperwork and preparation on behalf of the homeowner. Sellers considering a short sale should consult with experienced real estate agents to assist with the preparation of the documents required by the lender(s). These transactions often require a protracted time period. Therefore, all parties must be educated up front with regard to expectations of the short sale process and be communicated with on a regular basis.
Short Sale vs. Foreclosure: for a free consultation call or firstname.lastname@example.org
The mere prospect of losing your home can be a terrifying experience. Record numbers of homeowners are facing this dreadful possibility due to the financial meltdown, predatory lending practices, a weakened economy or personal reasons. Whatever the cause, most people in this situation are in unfamiliar territory and need help from someone with experience who can explain their options, provide alternative scenarios, negotiate with creditors and assist in taking back control.
We are here to provide that guidance and expertise. Our services are free to you. Through our experience and training, we will help you:
- Avoid foreclosure;
- Protect your credit scores;
- Decide if a short sale is the best solution;
- Minimize legal risk;
- Share with you what is required by lenders;
- Assume responsibility for compiling and packaging all necessary documentation;
- Negotiate with lenders on your behalf.
If you are in this situation, don’t wait! The sooner you seek help, the better the possibility of having a successful outcome. Although it is a natural tendency to avoid action, this will only exacerbate the problem.
track record of successfully preventing foreclosures through the short sale process is over 90%. Continue exploring this website for more information, or contact us now for a free consultation.
There’s no doubt the housing bust has created challenges for economists, taxpayers and homeowners on a scale previously unseen since the Great Depression. While many people are negatively impacted by these trying times, others have placed themselves in a position to take advantage of unique market opportunities. The good news for people in a position to purchase a home, move up from an existing property or invest in real estate, is that property values, coupled with historically low interest rates, have never been better – if you know where to look, what to look for, and how to structure a deal. These transactions are not for the faint-of-heart, but can be rewarding to the astute (and patient) buyer.
Would-be buyers are well-advised to select an experienced, committed and active real estate partner to assist in the buying process. There are many unique and complex matters that short sales and foreclosure sales require. Eliminate the frustration of losing out on one opportunity after another by having a pro in your corner.
As specialists in the purchase and sale of distress properties, this site was developed to specifically help you identify properties being offered for sale that are either in the foreclosure process, being offered as a short sale or have been foreclosed on and are being sold by a bank.
We offer our expertise in assisting buyers with the purchase of these properties. By having the Csira Group represent you, you will:
- Gain an insider’s perspective on which properties offer the best value;
- Learn how to write a winning offer;
- Benefit from the experience of successfully negotiating with dozens of lenders;
- Generate offers with no cash out of pocket;
- Avoid risk and minimize legal exposure;
- Dramatically increase your chances of getting offers accepted;
- Have professional representation guiding you through every step of the process.
As a demonstration of our commitment to this market segment, we have implemented a one-of-a-kind search tool that enables visitors to search on all short sale and foreclosure properties available in South Orange County. Help yourself to our specialized property search tools, or call us for a free consultation.
QWill I have to pay a broker to sell my house in a short sale?
AProbably not. All closing costs are typically paid by the lending institution in a short sale, including broker’s fees. However, in rare instances, lenders have requested homeowners to share in the expense of the sale. Also, junior lien holders may request some consideration in exchange for their cooperation.
QWhy would a lender agree to accept a short sale?
ALenders have plenty of incentive to negotiate a short sale with a distressed borrower. For example, should the lender take back a property pursuant to a foreclosure sale, the lender would become responsible for a variety of costs, including property maintenance, utilities, HOA fees, and might risk destruction of the property by vandalism. Furthermore, lender-owned properties (REO) may take a long time to sell, in part because so many REO properties are now for sale.
A lender will typically evaluate the financial situation of the borrower as well as current market conditions to determine whether or not to agree to a short sale. It is really a business decision for the lender to determine whether it would receive more money by accepting the short sale, or completing a foreclosure, reselling the property, and pursuing personal liability (i.e., deficiency judgment against the borrower and/or claims against guarantors, for loans on which those remedies are available.)
QWhat options does a lender have if the borrower stops making the payments on the loan?
AA lender may foreclose on the defaulting borrower's real property which secures the loan. There are two types of "foreclosures" available to a lender: a trustee's sale and a judicial foreclosure. Technically, a trustee's sale is not a "foreclosure" but the term has been used for both a trustee's sale as well as a judicial foreclosure.
For certain loans, a lender has no choice and must conduct a trustee's sale. With a trustee's sale, a lender cannot go after a deficiency judgment. A deficiency occurs when the current market value of the property is less than the loan on the property.
The lender may also be able to pursue "guarantors" of the debt who have signed written guarantee agreements (not including the borrowers).
QWhat other options may the lender consider instead of foreclosure when the borrower is delinquent?
ADepending on the situation, a lender may consider one of the following:
Loan Workout: Basically, a loan workout is any resolution of a problem loan between the lender and borrower that modifies the original loan agreement. Some of these options include forbearance (e.g. forgiving a portion of the debt or late charges); deferment; renegotiating interest rate, monthly payment amount, principal amount, maturity date; or the enforcement an acceleration clause in the loan.
Deed in Lieu of Foreclosure: After the borrower is in default, the borrower voluntarily delivers title to the lender for consideration and the lender accepts the conveyance of the property in full satisfaction of the mortgage debt. Using this method, the lender saves the costs of foreclosure and the borrower avoids having a notice of default on his/her records.
Short Sale: A short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount due and accepts the proceeds as full payment of the loan. A lender may accept a short sale when the borrower is in severe financial straits and market conditions make a short sale the best choice to mitigate the lender's damages. Like a deed in lieu of foreclosure, this saves the lender the costs of foreclosure and the borrower avoids having a foreclosure on his or her credit report.
Short Payoff: With a short payoff, the lender accepts less than the remaining mortgage amount as full payment of the loan. The property need not be sold.
Note: Some lenders do not differentiate between a short sale and a short payoff.
QCan a real estate lender obtain a deficiency judgment against a defaulting borrower following foreclosure?
AIt depends. California has "anti-deficiency statutes" that protect certain borrowers from deficiency judgments. Under those circumstances, a lender would opt for a trustee's sale foreclosure which is quicker and less expensive than a judicial foreclosure. A trustee's sale foreclosure does not involve the courts. Generally, there are five situations in which a deficiency judgment is prohibited:
1) Purchase Money. If the loan is obtained to purchase a residential 1-4 unit dwelling all or part of which is owner occupied and the loan is secured by that property, the lender may not obtain a deficiency judgment against the defaulting borrower. This loan is entitled to "purchase money" protection. Note, however, that should the buyer refinance the home, the new loan is no longer "purchase money." Thus, the buyer would lose the protection against a deficiency judgment in the event of a default.
2) Seller Carryback. If the purchase money loan for any type of real property is financed by the seller and secured by that same property, the lender/seller may not obtain a deficiency judgment against the defaulting borrower/buyer.
3) Trustee's Sale. A lender may not pursue a deficiency judgment against the borrower should the lender opt to foreclose by a trustee's sale foreclosure (a non-judicial action).
4) 3 Month Time Limit. An action for a deficiency judgment must be brought within 3 months from the time of judicially-ordered sale.
5) Fair Value Limitations. A deficiency judgment is limited by the difference between the amount of the indebtedness and the fair market value of the property, unless the actual sale price exceeds that value.
When a deficiency judgment is permitted, the lender may obtain one only following a judicial foreclosure, or when the security has become valueless (such as when security for a second trust deed loan is wiped out when the first trust deed lender completes its foreclosure). Holders of a junior deed of trust (second, third, etc.) should note that if the "wiped-out" junior lien is not purchase money or seller carryback, then the junior lien holder may sue on the note and the borrower on the junior loan may be personally liable.