Question: I am thinking about conducting a short sale on a condo I have in Palos Verdes. I have a home in Orange County that has some amount of equity, and I’m doing alright in my 401k. Doing a short sale with my mortgage lender will not risk my other assets, will it? If I am unable to do a short sale with the condo and end up having to lose it in foreclosure, what will happen? And will the tax liability be the same for either outcome?

Answer: If you bought the Palos Verdes condominium with a mortgage loan, a foreclosure will terminate the bank’s rights to any of your other assets. If the mortgage lender agrees to let you do a short sale, you should also end up with no liability to the lender, unless part of the agreement was reimbursing the lender the discrepancy of your loan and the sale.

Basically, you shouldn’t have any liability for the short-sale-difference unless that was originally part of the agreement.  Then of course you’ll be responsible to those payments in  whatever form you agreed to make them.

As for the tax issues, keep in mind that the IRS doesn’t recognize any tax liability whatsoever for forgiving non-recourse debt.

You may even have a potential buyer who has put down all the paperwork to make an offer, and they still won’t cave. On the plus side, this can go two ways- the bank may say you have to go into forclosure, but they may also try to convince you to stay in your house and refinance your mortgage.

You may even be able to settle it with a loan modification.

If that doesn’t work, though, and your bank is willing, a short sale may be completed. In order to comfort potential buyers, you may want to think about moving out of your house while going through the shortsale process- this will make it seem less likely that you may decide to simply refinance. And be sure to get official approval from your bank. “Bank Approved Short Sale” is much more likely to get takers than one that doesn’t yet have expresss permission. a

Many real estate agents have had to do with on-the-fly, on-the-job training through experience with these types of sales.  They all require more paperwork than a regular home sale and more patience, but they’re not impossible. Private companies often offer training programs and certification labels to show clients that an agent has ‘official’ skills in the ‘distressed’ property field.

Sellers forced into a foreclosure and/or a short sale are often panicky and more difficult to deal with, but they need to keep in mind that they can stary in their homes for quite some time. Receiving a notice from the bank does not necessarily mean you have to move out right away. The bank doesn’t own a home until it has been officially foreclosed, a long and difficult process.

In this window, a skilled real estate agent can intervene and get the ball rolling on a shortsale instead. The seller must prove financial hardship, but it is not impossible.

If a realistic offer is made, your real estate agent submits a big packet of paperwork to the lender/lenders for them to approve the deal. This is a crucial step that requires high precision- even one piece of paper out of place in that packet can result in a no-deal and big waste of time. Lenders have limited time to work through these packets with you- if there’s something wrong, they’re likely to just put your back at the bottom of the pile, so to speak.

On Tuesday, the National Association of Realtors reported that home prices in major metropolitan areas declined almost fourteen percent when compared to the same time last year. However, prices were up in the first part of the year, which suggests that the oscillations may even out.

An agent with J.T. Kirkland predicts that mortgage rates and the federal homebuyer’s tax credit will help to pull in new buyers into the market, keeping prices at least stable, if not rising, into the spring.
“It’s different town to town, city to city,” he says. “Areas with good schools are seeing increases, for example, and demand is rising again.”

He confirms that, on paper, prices at the high and low ends of range have indeed dropped, but that the middle prices have remained fairly stable, which means that most buyers and sellers will have more luck than they suspect. However, the markets flooded with foreclosed and shortsale properties, which create a downward pressure on prices. Real estate short sales have been very helpful in some areas, but when they become to common they tend to exacerbate the problems.

But the tax credit is doing its job- incentivizing first-time buyers to get into the market and snap up those foreclosures and short sale homes. And though overall prices are down, the actual number of sales is increasing thanks to the credit. Sales of single-family homes and condominiums actually rose more than eight percent this quarter, though they haven’t reached anywhere near the peaks of 2004-2005.

The main problem, say experts, is psychological. People feel frightened, insecure in the their jobs and wary of getting trapped into a payment deal they can’t handle. The key to overcoming these doubts is open communication with lending institutions, buying affordable homes that fit one’s income, and ignoring the melodramatic reporting on the housing market on TV. Television news exaggerates in order to get more viewers- obtaining news from free outlets can often be more reliable. The only thing to fear is fear itself.

Another thing for potential buyers to keep in mind is that they will never get an opportunity like this gain- home prices will soon begin rising again. It’s smart to get into the market while everything is cheap.

The plan is designed to help homeowners who don’t have the income or debt levels to qualify for a loan modification under the Obama administration’s $75 billion Making Home Affordable program. The plan establishes timelines, a standard process and documents, and cash incentives for participation.

Short sales, as these deals are known, reduce the damage to the borrowers’ credit record and save the lenders the cost of foreclosure. Short sales also help neighboring property values because the sales price is usually higher than what the house would fetch in a foreclosure auction.

About one in 10 home sales this year was a short sale, or an estimated 500,000 sales, according to the National Association of Realtors. In areas like Las Vegas, southern Florida and California, the ratio is far higher.

Statement of income and assets, here you want to be truthful and straightforward detailing to the lender will of your accounts savings checking in any other assets you may have that they will look at before agreeing to a short sale. Proof of income or the lack thereof, again it’s best to be truthful and straightforward they will be able to obtain filings that your employers may have made and it’s best to have that information up front rather than to find out once you’re deep in the process that the process has been declined because they discovered something that you did not disclose.

Current market comparisons, it’s best to include a competitive market analysis markets decline properties decline all calls in home values drop this can be part of the reason why you can’t simply sell your home and pay off the lender you’ll need to substantiate this claim via a comparative market analysis he qualified real estate agent can compare your comparative market analysis which basically shows prices for similar homes in your area, this will include homes that are active on the market, pending sales, and homes that have been sold in the last six months.

Home forclosure shortsale

If everything checks out the lender theoretically should approve your short sale as part of the agreement you should ask your lender not to report this transaction negatively on your credit, while this is a standard request the lending institution is under no obligation to comply unless they explicitly agree to.

Access loss mitigation has performed numerous home short sales, we have in effect reversed the foreclosure process and pre-foreclosed on the lending institutions on behalf of the homeowners by utilizing the short sales process. We would be more than happy to provide a absolutely free no obligation consultation.

Whether you were able to get your lender to agree to a shortsale, or you had to resort to the worse blow of foreclosure, if you get started rebuilding right away, you can take steps to re-polish your tarnished credit report. You should definitely go over the details of your credit report- you need to know exactly where you are right now. You can get a free report through many venues, and you should double-check with your own records for accuracy. And if you find any egregious (or even small) problems, you should bring it up right away.

If you have other old debts, you should pay them off as quickly as humanly possible. Forgo buying anything that’s not a necessity and pay off your credit card or car, because those little things can help.

Watch out for scammers who purport they’ll help you repair your credit Don’t pay anyone to do anything illegal, and don’t pay someone before you’re completely certain what service they’ll be providing you.

Double-check the status of the shortsale you did. Make sure that your account shows the zero you deserve for allowing your mortgage lender to accept a payoff for less than what you owed. You went through the struggle of a short sale, and if they don’t write it off as a zero, you need to make sure the discrepancy is addressed.

Of course, you can’t just automatically assume that your short sale is obligation-free. IT depends on your lender- some will automatically file a deficiency judgment and make you pay some portion of the discrepancy between what you earned on the escrow and what you owe the bank.  Also- the federal government may be able to tax this difference, if the bank DOES pay for it, as income. Make sure you’re clear on the stipulations of your lender and the federal tax code.

The point is, after the emotional roller-coaster of having to give up your home, you need to stay on top of your finances. If you’re responsible and diligent, you might be able to get yourself a new home in just a few short years. But make sure it’s with a loan you can afford to pay!

According to a recent study conducted in California, almost twelve percent of all sales in the real estate business were short sales in the past few months.

This sudden onslaught of popularity of the this maneuver has left bankers at a loss- short staffed and undertrained, they are trying to keep up their service people numbers to contend with all of the new loan modification requests and short sale dealings, each of which is very time consuming and labor-intensive to execute.

There is a very sharp learning curve for both mortgagers and mortgagees, as well as loss mitigation specialists and other intermediaries. Banks are striving to close the short-sale close gap, making sure that a higher percentage of houses that go on short sale actually get purchased. Though home sales are on the decline in general.