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FREQUENTLY ASKED HOMEOWNER QUESTIONS

THE SHORT SALE PROCESS OVERVIEW
It seems each day there is more news about the ever changing real estate market. More of our families, friends and neighbors are struggling with the real estate and economic crisis. While it can be very confusing sifting through all of the options and programs available to consumers, the good news is that there are viable alternatives for homeowners.

What is a Short Sale?

A short sale is where a homeowner elects to sell their home for a lesser amount than the total amount due on their mortgage. Conducting a short sale can relieve the homeowner of their current mortgage payments and possibly stop any foreclosure proceedings against them. A short sale is a complex real estate transaction where all parties involved (ex. investors, lien holders and possibly mortgage insurers) must agree on the terms of the short sale. Upon completion of the short sale, homeowners will not receive any proceeds from the sale of the property and may be responsible for potential credit and/or tax implications. However, if the property is your primary residence, you may qualify under the HAFA (“Home Affordable Foreclosure Alternatives”) program and receive a relocation allowance.

Necessary Documents

To begin the short sale process, you will find enclosed the necessary documents to be completed by the homeowner(s). In addition, you will need to provide our office with the following:


·         Copies of your last two (2) months bank statements

·         Copies of your last two (2) months paycheck stubs. If unemployed, a written letter explaining your current situation of unemployment.

·         Copies of your last two (2) years Federal Tax Returns. If you did not file in the past two years, a written letter explaining why you did not file.

·         Copies of your most recent Utility Statements (Electricity, Water, Gas, etc.) if applying under HAFA

·         Copies of your most recent Homeowners Association Dues Statements, if applicable.

·         A handwritten detailed hardship letter explaining your situation and need for conducting a short sale.

·         A $295 check payable to the Law Offices of Barry L. Miller.

 

Timeline – How Long Is This Going to Take?

In today’s current real estate market, navigating through the short sale process isn’t as quick as it used to be. On average, the homeowner can expect anywhere from 10 to 16 weeks to complete a short sale. Of course, this timeline starts once all required documents have been received in our office.

 

STEP 1

STEP 2

STEP 3

STEP 4

STEP 5

Steps for Agent

Client lists house with real estate agent and engages the Law Offices of Barry L. Miller

Obtain written contract/offer on client’s home

Assist in scheduling home valuation for BPO

Respond to any counter offers from lender

Close the deal

Steps for Client

Client Consultation with our attorneys

Client collects and submits documents to Law Office of Barry L. Miller

Allows access to property for BPO valuation

Reviews any counter offers

Closing

Average Timeline

 

1 to 3 days

2 to 3 weeks

2 to 4 weeks

4 to 6 weeks

Estimated Total Time: 10 –16 weeks*

(Highly depends on loan complexity, investors involved and buyer financing)

*Note: Delinquent HOA dues, property taxes or multiple mortgages on a property may impact the length of time to complete the transaction.


 

 

Q. How long do I have to act?

 

A. Time is of the essence when you are behind on house payments. Time is definitely not your friend in this situation. Each day that passes makes it that much harder to get an agreement with your lender. The home foreclosure process can take anywhere from a few days to many months, depending on your state law and the method of foreclosure your lender chooses to use. We have encountered many homeowners who did not even know they had already lost their house! 

 

Q. What is a “short sale” request?

 

A. A short sale request is when our company asks the Lender if they would take a discount on the amount that is owed on the property.

 

Q. Why does the short sale process work?

 

A. Your mortgage company runs different scenarios on your property to determine what they will get from a short sale versus foreclosure. Your mortgage company takes the following factors into consideration:

 

·         The foreclosure process and attorney financial cost.

·         Holding costs involved i.e. how long will the house stay on the market?

·         They may have to make repairs on the property.

·         They have to carry property insurance.

 

Q. Should I negotiate with the lender myself?

 

A. Yes. If you are only one payment or two behind and your lender has not hired an attorney to begin foreclosure proceedings, you may be able to negotiate a work out agreement yourself. If you are successful then you have saved yourself some funds that can be used to catch up on your mortgage. Just remember, don’t waste a lot of time on this. Time is not on your side right now. If you don’t have something worked out within 1-2 weeks, then it’s obvious that your lender is not serious about working things out with you directly. When you get to that point, you will be better served by professional representation that can use the formal business and legal protocols to your advantage. 

  

Q. Several companies have contacted me recently offering to help. How are you different from other services?

 

A. There are many predatory companies who are not what they appear to be. Beware of unscrupulous companies who are actually just interested in buying your house at a big discount; attorneys who just want to take you into bankruptcy or companies that collect a consultation fee then do nothing for you. The foreclosure process is very fast. It is important that you are well aware of this fact. Our firm, Law Office of Barry L. Miller, P.A., specializes in real estate and we understand every function of the lender short sale process. By understanding how the lenders work, our mitigators prepare a technical short sale package for your property that the lender will start processing immediately. Other companies or realtors do not have the techniques or the relationships that we have with the lenders. Other companies and realtors simply put your house on the MLS and hope to find a buyer. If they are lucky enough to find someone to purchase the property, only then do they begin the actual short sale process. What most realtors fail to understand is it takes anywhere from 30 to 120 days for the lender to actually process the short sale. Unfortunately, they then lose buyers because of the long wait. We do not wait for a buyer to start negotiating your short sale. This saves time and allows us to price your home at a discount below all other competitors. Other companies and realtors waste critical time waiting and are unaware of what documentation the lender needs upon initial contact.

 
 Q. What are some of my other alternatives?

 

A. We explore all of your options:

 

1.     Pay off your mortgage or refinance.

2.     Pay off your back payments or restructure your loan with higher monthly payments.

3.    Deed in lieu of foreclosure. This does not always release you from the foreclosure or the responsibility of paying back your loan. This is most common if you have a great deal of equity in the property.

4.     Sell the property yourself at the amount still owed on the mortgage.

5.     Hire a realtor who is less experienced in the short sale process prior to the foreclosure sale date.

6.     Loan modification.

7.     Declare Bankruptcy

 

Q. Do I have enough time to stop my foreclosure?

 

A. Up until the foreclosure sale occurs there is still hope. If a sale date for your house has been set, you need to act quickly. We have stopped sales set for the next day but this is extremely risky and some lenders will not agree to it. Your best option is to take action immediately to stop foreclosure before it goes too far. 

 

Q. How will this affect my credit?

 

A. Credit history is a very complicated issue. There are many factors that determine your credit rating. What we hope to do is keep a full foreclosure off of your credit report.

 

Q. Can I repair my credit after I work with you?

 

A. Yes, you can. We can recommend you to several companies that can help you after we stop the foreclosure. The important part is to stop the foreclosure process first. 

 

Q. Do I have to be late on the mortgage payments?

 

A. NO. The lenders would sometimes rather work with a homeowner who hasn’t fallen thousands of dollars behind. The lenders would rather find a solution before payments have stopped being made.

 

Q. How long does everything take?

 

A. The short sale process is a complicated one. The entire process generally takes about 30 to 120 calendar days, but can take longer depending on the amount of foreclosures a particular lender is handling in a given month. Our goal is to get everything done as quickly as possible so that you can get on with your life without having the threat of foreclosure hanging over your head or having a foreclosure appear on your credit report which could affect your ability to lease or buy a home in the future. The most important part is your ability to help us get any paperwork the lender may require before they agree to a short sale. 

 

Q. I’m currently in bankruptcy. Can you still help?

 

A. Yes. But we cannot negotiate a work out agreement with your lender until your mortgage has been discharged or dismissed from the bankruptcy proceedings. We can still evaluate your case and explain the best options to save your home. Then when the mortgage is out of the bankruptcy we can proceed with the home foreclosure assistance. Sometimes after bankruptcy it is easier to make a mortgage payment because other debts have been discharged.

 

Q. I’ve already talked with my lender and they just want all their money. Can you still help me?

 

A. Yes. Most of our clients have experienced this kind of inflexibility from their lenders before contacting us. We get your bank to listen to your needs because they know and trust us. Over the years we have developed a positive working relationship with key people at most banks. Our integrity and professionalism has earned us a reputation that allows us to be heard when no one else could get through the seemingly endless red tape. We will use our experience and connections to your advantage.

 

Q. How much money will I receive from this process?

 

A. When your lender takes a loss on what they are owed on your mortgage in order to do a short sale, the lender will not allow you to receive any monies from the sale. After all, they are losing money. Not only that, but the lender will require a HUD 1 form which shows who gets paid what. This is a federal form. If we were to show you receiving no money on the HUD statement that we provided to the lender, and then we were to give you money, both you and our company would be guilty of fraud.  However, if the property is your primary residence (Homestead) and you qualify under the HAFA (Home Affordable Foreclosure Alternatives), you may receive a relocation allowance.

 

Q. Do I need to give you the deed to my house?

 

A. No. Do not ever sign your deed over to an investor or a company claiming to help. By doing so, you are giving them your home. 

 
 Q. Do you have to put a sale sign in my yard?

 

A. Yes, your Realtor will need to find a buyer for your home. The sooner we can start the process, the easier it will be to get everything closed with your lender. A sign will also make it easier for one of our possible buyers to find your home.

 

 Q. Should I file for bankruptcy to save my house?

 

A. Maybe. The American Bar Association has reported that 96% of homeowners who declare bankruptcy end up losing their home to foreclosure anyway. Bankruptcy is very unlikely to help you save your home. If you declare bankruptcy you will likely end up with BOTH a bankruptcy and a foreclosure on your credit report. That being said, there are certainly times when bankruptcy is appropriate and we recommend you consult a reputable attorney should you think you need it.

 

Q. What tax implications should I expect?

 

A. Homeowners whose mortgage debt was partly or entirely forgiven may be able to claim special tax relief by filling out newly-revised Form 982 and attaching it to their federal income tax return, according to the Internal Revenue Service.

 

If you have questions, please call client services at 407-398-6900 - Helping you FastTrack your way through the short sale process!