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A Short Sale is the sale of a home when sales proceeds
do not fully pay off the existing loan(s) and lender(s) accepts a discounted
payoff to fully satisfy the loan.
The best part, the existing lender pays virtually all sales costs, including
commissions, escrow and title fees and repair costs. You get your home
sold, the loan(s) paid off and you avoid foreclosure.
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Mortgage lenders are increasingly willing to work with
borrowers faced with a financial hardship to accept a discounted payoff
on a mortgage. If you are faced with a hardship that makes it likely you
will be unable to meet your obligation on your mortgage, your lender would
prefer to settle the matter with you as opposed to taking the property
through foreclosure.
As you consider the option of pursuing a Short Sale, remember your lender
is looking to limit any potential loss on your loan. By completing a Short
Sale, your lender has arrived at a solution that is, for them, much better
than a foreclosure.
Bottom line, your lender wants to work with you.
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You have no out-of-pocket costs as the mortgage holder pays virtually all sales costs including title & escrow, commission, and approved property repairs.
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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
209-840-3727. 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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Deeding your property to someone without paying off the
loan is nearly always a bad idea. In the first place, the lender still
considers you primarily responsible for payment on the loan. If loan payments
do not get paid, or if the lender ultimately forecloses, this will show
on your credit.
Secondly, when you deed your property to someone else, you give up control
of the property. Along with the deed goes the ability to control the property.
Do not deed your property to someone without paying off the loan unless
you have consulted with an attorney.
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To some extent, that will depend upon the mortgage company
considering the Short Sale request. Generally, so long as the hardship
is real and the mortgage company believes the loan is likely to become
delinquent as a result, the Short Sale request will be processed by the
Loss Mitigation Department. A big key to getting Loss Mitigation to accept
a hardship is to submit a strong hardship letter. The hardship letter
sets the tone for the entire file.
Below you will find a list of “hardships” that are common and frequently
accepted by mortgage lenders.
- Family illness or injury
- Illness or injury in the extended family – particularly if it forces
relocation
- Job relocation when the property is equity deficient
- Job loss or significant income loss
- Divorce or split of domestic partners
- Adjustment in mortgage payment or unforeseen increase in living expenses
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The answer is, maybe. Some lenders will accept a Short
Sale file for approval on loans that are not delinquent. Other lenders
will not accept the file until the loan is delinquent. We can put your
Short Sale file together within a couple of days and submit it for approval.
(Remember, there is no charge for this). That is the best way to determine
if your lender will accept a file for approval on a loan that is current.
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There are actually several reasons why a mortgage company would approve a Short Sale payoff, including the following;
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Legal Concerns – Mortgage lenders have come under
legal pressure to work with borrowers to equitably resolve situations
where borrowers are unable to meet their mortgage obligation, particularly
when the borrower makes an effort to arrive at a compromise solution.
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Wall Street is Watching – Mortgage lenders rely
heavily on their ability to package and sell bundles of loans on the
secondary mortgage market. They need to sell these bundles of loans
in order to put the funds back to work by loaning the money again
and collect loan fees along the way. If mortgages perform poorly after
they are sold it could impact the lender's ability to sell their loans
on the secondary market. A successful Short Sale gets the loan payoff
resolved quickly.
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Asset Management Expenses- If a lender acquires
a property through foreclosure, the property will be managed until
it is repaired and resold. It is expensive to manage real property
assets - homes – spread throughout the region, the state and possibly
even the nation. Keeping properties maintained, keeping utilities
on, making repairs and the administrative costs attached to these
activities are all costs the lender would prefer to avoid. A successful
Short Sale eliminates most of these costs
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Reserve Requirement- Delinquent and non-performing
loans place another burden on mortgage lenders. For all delinquent
and non-performing loans lenders must set aside funds in reserve to
deal with potential losses. These funds cannot be put to work generating
new loan fees until the bad loans are resolved. A successful Short
Sale lets the lender put more money to work.
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In a word, no. That is why it is critical to work with
someone that has extensive experience at getting Short Sales approved.
From the presentation of the Short Sale package to the lender to working
with the lenders Loss Mitigation Department, we know how to keep the
file moving towards approval.
The first step is to get pre-qualified for a Short Sale. There is no charge
for this, and it’s easy.
Just Click or Call 209-840-3727
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Yes. We can work with both lenders (many times the same
lender holds the 1st and the 2nd loans) to put together a Short Sale transaction.
Even if the value of your home is below the balance of the 1st mortgage,
we can normally get the two lenders to cooperate.
In the end, neither lender wants to own another home through foreclosure.
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Absolutely. In fact, lenders are more motivated to do
a Short Sale on a property that needs work than on a property that doesn’t.
The lender knows the risk of loss goes up when they foreclose on a property
that needs lots of work.
Aside from expense of completing the work, lenders are simply not set
up to get the work done. They are in the loan business, not the fix- it
business.
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The big key here is to avoid foreclosure. By nearly any
measure, a foreclosure is the most damaging event your credit status can
encounter - worse than bankruptcy. In the course of getting your short
sale approved you may miss your mortgage payments, and these will show
on your credit.
By avoiding foreclosure, you will likely be able to resume normal borrowing
(car loans, credit cards, consumer goods and such) relatively quickly
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You may be able to keep your home. You need to convince your mortgage company of two things:
- The problem that caused the mortgage payment disruption was beyond your control – illness,
injury, temporary disability or forced job change are a few examples
- You are now solidly in a position to stay current on your mortgage
payments and make some progress towards making up the delinquent
amount.
We can help. Get our Free Guide:
Getting lender approval on a Forbearance or Loan Modification Agreement
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A Forbearance Agreement is a written agreement with your mortgage company in which you arrange to keep your home. The agreement will normally include two primary elements:
- The borrower’s promise to remain current on the mortgage going forward
- Some plan for making up the delinquent interest and other charges. It may mean making additional payments to the mortgage company or the delinquent amount could be added to the loan to be paid later.
To learn more about Forbearance Agreements click
here.
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