BiggerPockets

The alternative to a foreclosure or bankruptsy

Saturday, November 14

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The alternative to a foreclosure or bankruptsy

 

A short sale in real estate is not always a pleasant transaction.

There are many ways to lose a home but signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the hardest. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale."

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due.

 Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income, and there is no guarantee that a lender who accepts a short sale will not legally pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim.

Although all lenders have varying requirements and may demand that a borrower submit a wide array of documentation, the following steps will give you a pretty good idea of what to expect.

· Call the Lender

· Submit Letter of Authorization

· Preliminary Net Sheet

· Hardship Letter

· Proof of Income and Assets

· Copies of Bank Statements

· Comparative Market Analysis
· Purchase Agreement & Listing Agreement

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request. Credit report status is not always negotiable.

 

A short sale means the seller's lender is accepting a discounted payoff to release an existing mortgage. A lender may consider a short sale if the seller is current but the value has fallen. The seller may have over-encumbered, owe more than the home is worth.

If you find yourself confused and have any questions please do not hesitate in contacting me.  If I cant help you I will direct you to someone who can.

Crystal Gomez, M.A

Trilogy Property Solutions
13636 Ventura Blvd Suite 324
Sherman Oaks California 91423

818-571-4655 cell
888-571-7854 fax

www.go.managemyshortsale.com

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