Art & Brigitte Shultz have attended several seminars and are experienced and knowledgeable with the complex procedure dealing with mortgage lenders during the short sale approval process.
In real estate, a short sale generally occurs when the Seller's net sale proceeds after payment of customary closing costs from the sale of real property are insufficient to pay outstanding mortgage and/or other lien(s) in full at closing. Typically, a short sale seller is in default of loan or lien obligations and is able to document the financial inability to meet ongoing repayment obligations. A bank or mortgage lender agrees to discount a loan balance due to an economic hardship on part of the seller. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove a proposed sale.
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.
A short sale is typically negotiated to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the homeowner, the advantages include avoidance of having a foreclosure on their credit history. Additionally, a short sale is typically faster and less expensive than a foreclosure. The Shultz Team is ready and willing to assist a Seller who is seeking a short sale before they are placed in the foreclosure process.
Cooperation on the part of the borrower is essential. The Shultz Team has experience negotiating with lien holders on behalf of the borrower for a payoff for less than what they are owed, or rather a sale of a debt, short of the full debt amount.
Lenders have a department (typically referred to as a loss mitigation department) which processes potential short sale transactions. Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located.
The majority of lenders have a pre-determined criteria for such transactions, The Shultz Team helps the borrower through this process and can/will negotiate on their behalf with the lender. Distressed lenders may allow any reasonable offer subject to a loss mitigator\'s approval and acceptable appraisal of the property. "Red tape" is very common in short sales, requiring potentially multiple levels of approvals and conditions. Second mortgages (aka: "Junior Liens," HOA fees, etc), may need to approve the short sale as well. Frequent objectors to short sales include tax liens (income, estate or corporate franchise tax - as opposed to real property taxes, which have priority even unrecorded) and mechanic's lien holders. It is possible for second mortgage holders to prevent the short sale if their requirements are not satisfied.
The Mortgage Forgiveness Debt Relief Act of 2007
When a lender decides to forgive all or a portion of a borrower's debt and accepts less, the forgiven amount is considered income for the borrower and is liable to be taxed. However, after the signing of The Mortgage Forgiveness Debt Relief Act of 2007 by President Bush, amendments have been made to remove such tax liability and allow the borrower and lender to work freely together to find a common solution that is beneficial to both parties. This protection is limited to primary residences so consultation with a tax advisor is necessary to ensure that a borrower qualifies.
For more information please call us direct at: (800) 243-4087
Art & Brigitte understand that issues arise in our lives that seem overwhelming and are sometimes beyond our control. The Shultz Team's goal is to help those looking for a solution to their financial hardships and give hope that there is an alternative to foreclosure.
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