Short Sale Questions & Answers

Post on: 16 Март, 2015 No Comment

1. What is a CDPE?

A Certified Distressed Property Expert® is a real estate professional with specific understanding of the complex issues confronting the real estate industry, and the foreclosure avoidance options available to homeowners. Through comprehensive training and experience, CDPEs are able to provide solutions for homeowners facing hardships in today’s market, specifically short sales.

2. What happens in a foreclosure?

A foreclosure is a legal process that starts when you fall several months behind on your mortgage payments, fail to make arrangements to repay the missed payments, and your lender exercises the legal right to terminate your mortgage, assume ownership of your property and sell it at a Sheriff’s or Public Trustee’s Sale.

3. What is a Demand Letter?

Before a lender forecloses, you will receive a demand letter stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings.

4. What is a Sheriff’s or Public Trustee’s Sale?

The lender’s attorney will schedule a sale date that is the actual day of foreclosure. You may be notified of the date by mail, a notice will be taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees

5. What is the Redemption Period?

After the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff’s or Public Trustee’s Sale.

6. What is a short sale?

If you owe more on your property than its current market value, and one of the above solutions does not apply to you, a short sale may be the solution to your problems. You may also qualify for the government’s Home Affordable Foreclosure Alternatives Program (HAFA). Part of HAMP, HAFA offers incentives to servicers to streamline short sales and provides up to $3,000 in borrower relocation assistance to homeowners who successfully complete a HAFA short sale. The entire short sale process is detailed here.

7. How do I qualify for a short sale?

To qualify for a short sale you must meet any or all of the following criteria:

Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

8. What is a mortgage modification?

This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments. A mortgage modification is a process through which your mortgage lender changes any or all of the following:

Your interest rate
Your principal balance (through a reduction)
Your loan terms (example: from an adjustable to a fixed rate)

9. Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.

10. What do I need to qualify for a mortgage modification?

According to the Making Home Affordable Web site. you will need the following information for your lender to consider a modification:

Information about your first mortgage, such as your monthly mortgage statement
Information about any second mortgage or home equity line of credit on the house
Account balances and minimum monthly payments due on all of your credit cards
Account balances and monthly payments on all your other debts such as student loans and car loans
Your most recent income tax return
Information about your savings and other assets
Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources
If applicable, it may also be helpful to have a letter describing any circumstances that caused your income to reduce or expenses to increase (job loss, divorce, illness, etc.)

11. How do I qualify for a mortgage modification?

The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking for, you can request to be referred to one of the following departments (different lenders have different names for these departments):

Loss Mitigation

Mortgage Modification

H.O.P.E.

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP).

For a list of mortgage lenders and servicers, visit www.HopeNow.org .

12. What is a Home Affordable Refinance?

If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

13. What if I don’t qualify, can’t afford my home, and owe more than it’s worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents with the Certified Distressed Property Expert® Designation have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure.

14. What are the qualifications for a Home Affordable Refinance?

According to the resources released by the government, following are a list of qualifications:

You are the owner/occupant of a one- to four-unit home
The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see Useful Links )
At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

15. Are there any tax consequences?

In 2007, The Mortgage Forgiveness Debt Relief Act and Debt Cancellation legislation was passed. This allows homeowners to short sell their homes up to 2 million dollars with no tax consequences. Be sure to consult your tax professional for more information. You can also visit the IRS website at www.irs.gov .