HUNTER PASCHALL IS A Pre Foreclosure Expert

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A short sale in real estate occurs when the outstanding mortgage and cost of selling the property are greater than what the property can be sold for. Short sales are a way for home owners to avoid foreclosure on their homes and still be able to pay off their loan by settling with their lender.

Most lenders vary in their requirements. Your first step should always be to contact your lender. However, most lenders require the following:
1. Your payment is delinquent or is about to be. Most lenders will not work with someone who is successfully making or can continue to make their loan payments on time. Each lender’s policy is different, so if in doubt, check with your lender. Some will permit a short sale with no delinquency.
2. You have a qualifying hardship. Examples that qualify are divorce, loss of a job, income reduction, loss of a partner, medical bills, excessive travel time to a job, etc.
3. You have no other major assets. Lenders who see home owners with large bank accounts or assets are less likely to cooperate on a short sale. Retirement funds are not typically considered as an asset unless sizeable. * If you are in a hardship, do not let this be a deterrent, we have successfully negotiated a short sale with others who have had large bank accounts and other assets before. Each case is unique, Contact us today to see what we can do for you.*

No. But as lenders vary in their requirements you should contact your lender and find out their policy. Unfortunately, most lenders are less willing to settle if the loan is current without a cash contribution or promissory note.

There are several stages to the Short Sale process which can be lengthy. The typical sale takes 5-7 months from start to finish. Here are the stages of a short sale:

1. The first stage requires the home owner to gather all the documentation that your bank will require. We have a check list from all of the lenders we work with to make it easier for you. This stage shouldn’t take longer than a few days. Please review the section on short sale paperwork for the required documentation. Some banks require that their unique forms be used as well. We can help you with your banks forms once we start working on your short sale.
2. Once you have all your paperwork completed, stage two is simply contacting us to schedule an appointment to meet you to discuss your unique case and for us to see your home
3. The third stage is the actual presentation of the offer to your bank. This is where our expertise and experience in negotiating Short Sales takes place. The negotiation and approval process can take anywhere from 30 to 120 days. Numerous phone calls, emails, and faxes are required between the lenders and our team (on average 60-90 days). If we are dealing with a single lender rather than multiple lenders, it is easier (although not necessarily faster) to obtain the approval.
4. The fourth and last stage to the Short Sale process is the period of time between Short Sale approval from the bank and the buyer closing on the home. Although the Short Sale addendum states the close will occur 30 days after bank approval, be aware that the banks typically push for a 2-3 week close. When possible we encourage all parties to accommodate the bank on this issue.
5. The fifth stage is the closing of the short sale. Our company has a pool of buyers that are able to close on the short sale once all of the parties come to agreeable terms.

First we recommend you get legal counsel and tax advice. If you are current on your payments, we suggest you check with your lender to determine if you must be delinquent to qualify for a short sale. Next, fully complete your paperwork as listed on Seller Overview of Homework Needed and contact our office. We will take it from there.

No. We do NOT charge you a fee for any of our services. Some real estate agents or companies may charge an upfront processing or retainer fee from the seller before beginning a short sale but we do not.

YES, we strongly recommend that you do. HOA fees are an owner’s personal obligation. If they are not paid, it can result in credit damage, lawsuits, or other collection efforts. Also, Fannie Mae backed loans (as well as some other lenders) will not pay for unpaid HOA fees on a short sale. A few lenders will, but they are in the minority. This can inhibit the closing of a short sale unless one of the parties (seller or buyer) can pay off the debt at close. Sometimes HOA companies can foreclosure faster than a bank can. In order to make sure that this doesn’t happen, we recommend that your HOA fees stay current.

When you complete a short sale, you will receive a 1099-COD which stands for Cancellation of debt. On a foreclosure you will receive a 1099 A which stands for Abandonment of secured property .The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence for their original mortgage amount. Debt forgiven through short selling as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). For more information go directly to the IRS website at IRS.gov and do a keyword search of Mortgage Debt Relief Act to view their FAQ on the subject. The Mortgage Debt Relief Act was just recently extended for another year.
Investors need to be aware that this Act covers principal residences only. However, whether foreclosing or short selling the tax issue will need to be addressed by the investor. Generally you should try to minimize the loss to the lender in order to minimize the taxable amount. That is best accomplished by a short sale. As always, we recommend that you seek professional tax advice before any decision to begin a short sale or before foreclosure. We can help with this too. We work with a number of attorneys. We can help recommend one if needed.

This question is difficult to answer as a variety of factors compose a credit score. Here is what we can tell you, the initial damage to your credit comes in the form of late payments. If you go 30+ days behind on your mortgage payment, your bank has the right to report that to all of the credit bureau s. If reported, late payments do have a direct affect on your credit. After going through a Short Sale or a Foreclosure, most people have 30, 60, and 90+ day late payments reporting on their credit report. When the actual Short Sale is completed, banks have different methods of reporting a short sale. Most will

reflect that your account was paid for less than the full amount. Some lenders will reflect on your credit report account settled. We do not know how each individual lender will report it. This is simply the most common language used. If your home were to go to Foreclosure you would most often see the bank report Foreclosure on your credit report.
Credit experts will agree that neither a Short Sale nor a Foreclosure is favorable to your credit or credit score, however, the impact of a Foreclosure is much worse and will stay on your credit history for a longer period of time. We strongly advise you to work with a Credit and Credit Scoring Expert for more specifics on this topic, and ways in which to improve your credit after the Short Sale is complete. We work with a local company that has helped many others in your similar situation; we can put you in touch with them once we have completed the Short Sale.

Generally banks have found that it is more cost effective to do a Short Sale rather than foreclose on a home. Banks are not interested in owning real estate. While banks do take a loss on a Short Sale, foreclosing on a home can cost the bank 10%-20% more than doing a short sale and take a lot more time and resources from the bank. Short sales also involve fewer parties and the property gets reoccupied quicker.

It varies. Most notes (the I.O.U. that you signed when you took out the loan) give the bank the right to file a notice of default as soon as you are 30 days behind on your mortgage. While they have this right, most lenders do not file for a trustee s sale (the legal process to foreclose) until you are 90 days or more delinquent. From the date of filing for a trustee s sale, there is a 91 day period between filing and the actual foreclosure sale or trustee sale. Therefore it often six months or more from the first missed payment until foreclosure. We can often postpone the trustee sale if we are mid-negotiation on a short sale contract.

The sooner the better. Once you can no longer pay the monthly mortgage amount or see that you soon will not be able to and if you do not wish to pursue any other lender remedies (loan modification, etc.) begin immediately. The more quickly you act, the better the odds for a successful short sale.

Yes as either of these will halt a short sale. Loan modifications should be done before a short sale, especially if you wish to keep the home. If the loan modification fails or does not resolve your ability to retain the home, then you should begin a short sale immediately thereafter. PLEASE DO NOT wait until there is an auction date on the house. It is very hard to stop an auction.
If you are filing bankruptcy, you should receive legal counsel on whether to do that before or after completing a short sale. Most attorneys recommend doing the short sale prior to the bankruptcy. However, circumstances may vary. Even if you file bankruptcy, you still have not resolved the ownership issue, merely the debt. The home will still need to be sold through a short sale or disposed of through foreclosure. As no lender will process a short sale if you file for bankruptcy during the short sale process, we cannot take a short sale client who is in the midst of bankruptcy or plans to file during the short sale process. But do contact us during your bankruptcy.

This is a very complex question which is dependent on many factors. However our company has a 98% success rate of getting the amount forgiven and keeping the bank from coming after you for the debt. We negotiate very hard for you and will not close on the short sale if it is not in your best interest.

We cannot guarantee that we can close every short sale. Anyone who promises that is misleading you. Sometimes the banks will demand an unreasonable cash settlement from the borrower, or have inflated ideas about market value, or will not halt a trustee sale. Every loan has potentially three entities that must approve the short sale: the servicer, the investor, and the mortgage insurance company. Any one of them can dictate terms. But we do work very hard to insure that we close as many as we can. Ask about our high closure ratio.

Yes. They can ask, but asking does not compel the owner to agree. We make sure that you pay and little to nothing for a short sale. We negotiate hard for you to make sure that you don’t have to pay anything at all. But please remember, that all Short Sales are not the same. Contact us today to discuss your unique case so that we can better determine what to expect.

Probably not. Most lenders will ask all parties to sign an Affidavit of Arm s Length Transaction. This generally states that the parties cannot be a family member, business associate, or share a business interest.

Yes. Understand that the more missing pieces, the tougher the approval process. But we have included waivers for any documentation that is unavailable. We will submit the waiver in place of the required paperwork. This should not be used as a substitute however, for any available documentation. The more fully we provide documentation, the quicker the process and the greater the likelihood that the short sale will be approved.

Waiting too long to start the process, not supplying us with a complete package in a timely fashion, and filing bankruptcy or electing to loan modify in the middle of a short sale.
If you should have a question that was not mentioned about, please contact our office and we will be happy to help you!
We have over 55 years of debt negotiation experience in our office and there isn’t anything we can’t provide you with. Contact us now!
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