How much time do I have? Do I have to start now?
It is best to begin a short sale when you realize you can no longer afford the mortgage, so that your property can be marketed properly and you can receive a high offer. The earlier you start, the higher our likelihood of success. Remember that your lender requires a purchase offer to review your eligibility for a short sale and it may take a few weeks to get a solid offer.

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What will happen If I do nothing?
If you do nothing and are not making your mortgage payments, your lender will foreclose. You will have a foreclosure on your credit report, be liable for any deficiency, and/or subject to a taxable event.

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Will I get any money when the property sells?
NO, for the majority of loan types you are not allowed by your lender to receive any proceeds from the sale of your home. If you have an FHA loan, you may qualify for their pre-foreclosure sale program that does have a selling incentive.

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What if I file bankruptcy?
Filing bankruptcy will not stop the foreclosure process, just delay it. The property will eventually be discharged from bankruptcy protection and be back in the foreclosure process where it was when bankruptcy was filed. For further bankruptcy information, please seek the advice of legal counsel.

What is better on my credit – Foreclosure or Short Sale?
Please consult your own financial advisor or the credit bureaus directly for the answer to this question. From experience only, we can say that foreclosure is much more damaging to your credit. A short sale will most commonly be listed as “settled debt” and is much less harmful to your credit.

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Will I be liable for my lender’s financial loss?
Depending on your situation you may or may not receive a deficiency judgment or taxable event. It is best to consult an attorney for advice regarding any debt liability. Now, there have been recent changes in the law that reduces homeowner tax liability. Find more information on IRS web site regarding The Mortgage Forgiveness Debt Relief Act and Debt Cancellation. Most tax consequences have been done away with for primary loans on primary residences. Regarding deficiencies – you can have your agent request in the negotiations a full release of lien and that your lender considers the debt settled or satisfied. The bank has the right to ask you to sign an unsecured note or to ask you contribute money at the time of closing. Be sure your agent negotiates the best outcome for you.

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What other advice should I seek?
Be smart. Always seek professional advice from a qualified attorney and an accountant specializing in Short Sales/Pre-Foreclosure Sales.

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What about the federal government bailout programs?
To determine your eligibility, please visit www.FinancialStability.gov or www.treas.gov/initiatives/eesa/

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Will every lender or bank allow a short sale?
The answer is no. The majority of the lenders do short sales however; there are a select few that do not do short sales.

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How do I know what type of loan I have?
Knowing what type of loan you have is crucial to the process. There are often specific short sale requirements unique to each loan type. You can find this information by looking at your mortgage statement, the settlement papers from when you originally purchase the property, or by calling your lender.

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Will Lenders or Banks do short sales if the mortgage is current?
Some Lenders will entertain taking a discount when a homeowner is current on their mortgage however they typically require the property to be listed for sale by a licensed real estate agent.

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How long do I need to be in default before I can start a short sale?
This depends on the Lender. Some Lenders require a property to be 90 days in default before they will entertain a short sale offer; other Lenders will entertain a short sale even if it is not in default.

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What is required to process a short sale?
Every Lender or Bank has its own set of required information and some may even have a set of paperwork specific to them. But, in general, most banks require at least the following: A handwritten hardship letter, financial statements, 2 years tax returns, 2 months bank statements, 2 months paystubs, and that you have the property listed for sale at fair market value. Throughout the process additional paperwork may be requested. So, be sure to keep everything handy...

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How long does a typical short sale take?
Depending on what state you are from, this answer will vary. For example in the State of Arizona a short sale typically takes between 2 to 4 months. The short sale time-line is subject to your Lender or Bank. Many banks are overwhelmed right now with short sale requests. However, most do have an understandable review process. Unnecessary delays can be avoided by not sending incomplete short sale packages. Incomplete offers are often passed over or rejected. Your file is then closed and you would have to start over from the beginning. It is very important to be sure you provide everything required by your Lender and requested by the person helping you negotiate.

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Can 2nd Mortgages or junior liens be discounted?
Yes, absolutely. In fact, if the first mortgage is being asked to accept a discount, they will require that all other lien holders discount as well in order to give short sale acceptance.

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Can IRS tax liens be negotiated?
Yes, absolutely. Tax liens can be released from a property or reduced and paid at closing. Please consult the appropriate tax professionals for more information.

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What is an Authorization to Release?
This gives the people negotiating on your behalf permission to talk with your lien holder(s).

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A foreclosure sale date has been scheduled for my property. Can I still short sale my property?
Yes, absolutely. However, certain immediate steps may be necessary to get the foreclosure date postponed. You need to quickly complete the package of required forms, get your property listed right away, and cooperate wholly with your agent. A 3-way call to your lender may also be necessary to speed up authorization. There are no guarantees that there is enough time to get a postponement.

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Will the foreclosure process stop when we submit a short sale offer to the lender?
No. The foreclosure clock will continue to tick. Postponement requests can be made if necessary. Your Lender will only postpone foreclosure proceedings if they are certain a buyer will perform.

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When should a default property that needs a discount be listed?
Immediately. The Lender typically will not stop or slow down a foreclosure unless a property is listed for sale by a licensed real estate agent.

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Do we have to have a purchase offer to get short sale acceptance?
Yes. Most lenders require that a short sale offer be submitted before they will even accept a short sale package, order an appraisal, and make their review. They typically will not spend the time and resources to review your situation unless they know that a buyer will perform.

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I cannot afford to make any repairs…
When you are listing your property make sure your real estate agent adds the remarks “home to be sold AS-IS”. By doing this, Buyers will be aware that you cannot or will not make any improvements on the property. Be sure that your agent clearly expresses this to the Selling Agent and protects you in negotiations.

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My situation has changed and I can afford the monthly payments. Do I have other options?
Yes. Be sure to research your options. Your agent may be able to assist you further.

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I may file bankruptcy. Will this affect the short sale?
Yes. If you file for bankruptcy protection your Lender or Bank will be unable to discuss the terms of your short sale until the bankruptcy is released or discharged. A bankruptcy puts an “automatic stay” on any credit/debt collections which include negotiating a short-pay of your mortgage(s). Any pending foreclosure sale dates will be postponed as foreclosure is also a credit collection. Be sure that you inform your agent immediately upon making this decision. If you choose to file, please provide your agent with any paperwork involving the property that you receive from the Lender of bankruptcy trustee. For further information, please consult with a bankruptcy attorney.

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What happens if the Bank or Lender counters the current offer?
The Buyer will need to either increase their offer to meet that number or your agent will need to find another buyer that meets your Lender’s requirements.

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How does a bankruptcy affect my credit?
Bankruptcy will stay in your credit reporting agency files for ten years. Now, declaring bankruptcy doesn't necessarily mean that the door to future credit will be forever closed to you. If you take the proper steps after declaring bankruptcy and also manage your credit responsibly, you can rebuild an improved credit reputation in a few years. Consult a credit counselor or a major credit bureau for more information.

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How many years after a successful short sale can I buy a house?
There are new loan programs designed to help people who have recently had to short sale their home. You can apply for a home loan in as little as two years provided you have maintained your credit with good payment history, kept your debt-to-income ratio within lending guidelines, and have verifiable income.

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Can I do a short sale on more than one property?
Yes. You may short sale more than one property.

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Will the Bank or Lender pursue a deficiency judgment for the amount they lost? - Your lender can pursue a deficiency. This does not mean that they will. You can have your agent request in the negotiations a full release of lien and that your lender(s) consider the debt settled or satisfied and paid in full. The bank could ask you to sign an unsecured promissory note or to ask you contribute money at the time of closing. Be sure your agent negotiates the best outcome for you.

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What if my lender requests a promissory note or money at closing?
Your lender can make such requests. Whether or not you choose to agree must be a personal decision based upon your financial situation. Keep in mind that any amount requested by your Lender or Bank will likely be much less than they could potentially pursue from you as a deficiency judgment if the property were foreclosed upon.

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Will I need an accountant?
We always recommend that everyone in your situation seek the advice of an accountant or other tax professional.

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Do I need an attorney to represent me?
It is always important to seek legal counsel when making these types of decisions.

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I am behind on property taxes…
These can be negotiated into the buyers offer and paid at closing. The payment of taxes owed will simply be another reduction in the amount paid to your Lender. Please note: if the Lender forecloses on your property, this is an expense they will have to pay.

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Can I rent the property?
We cannot advise you to or not to rent the property. Keep in mind that if you are not paying the mortgage payment you should not be profiting from rental payments. If you chose to rent the property be sure to keep accurate expense records and put all rents earned in escrow due to the fact that if you are not paying your mortgage then those rental payments are owed to the foreclosing lender (s). Please consult a real estate attorney before making this decision.

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When should I move out?
Different loan types have requirements regarding occupancy that could affect your eligibility for a short sale. Before making the decision to move, be sure that you have talked with your agent and your Lender about your plans.

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The property is in bad condition…should I do anything?
Extensive repairs or clean-up will be considered by potential buyers and reflected in the list price. Should some clean-up be necessary to assist in the sale of the home, your agent will make that request and work that out with you.

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How do I get started on a Short Sale?
It’s easy. If you would like to get prequalified for a Short Sale, we can do it online.

If you would prefer to discuss it on the phone, or set an appointment call 623-217-7548. There is no charge to you to get started. It is as simple as contacting us and we will get to work. If you later decide you don't want to do a short sale, that is okay too.

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