What is Short Sale?

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What is a Short Sale? 
A Short Sale is the sale of a home when the net proceeds do not fully pay off the existing mortgage loan(s) and the Mortgage Servicer is willing to accept a discounted payoff. The closing costs that are typically paid by the Seller are paid out of the proceeds from the sale, including but not limited to, commissions, escrow and title fees and any negotiated Buyer’s cost. Your home is sold and you avoid foreclosure.

Why would any Mortgage Servicer accept less than what is owed on a mortgage? 
Mortgage Servicers are in business to lend money, not to own real estate. They do not want the expense of the foreclosure process and/or the holding and maintaining of the property if it does not sell at foreclosure. The foreclosure process is very expensive and time consuming, so many lenders will agree to what seems a loss on the mortgage when they will actually save money by not completing the foreclosure and holding the property in their portfolio.

If I do a Short Sale, how much will I have to pay to sell my home? 
In most cases, you will not pay any sales costs if your Mortgage Servicer approves the Short Sale. All commissions, title and escrow fees, and some repair expenses are paid by the Mortgage Servicer, Investor or Mortgage Insurance company, if applicable, as part of the Short Sale approval.

What sort of hardship would my lender consider legitimate? 
To some extent, that will depend upon the Mortgage Servicer considering your Short Sale request. Below you will find a list of common “hardships” that may be accepted by Mortgage Servicers:

• Family illness or injury
• Job relocation
• Job loss or significant income loss
• Divorce or split of domestic partners
• Death of a spouse
• Adjustment in mortgage payment or unforeseen increase in living expenses
• Too much debt
• Military service

Do lenders approve all Short Sales? 
No. That is why it is critical to work with someone, who has extensive experience at getting Short Sales approved and has direct contact with Mortgage Servicers.

I have a second mortgage on my property, so can I still do a Short Sale?
Yes. it is possible and common to work with the Mortgage Servicer that holds the second mortgage, (many times the same Mortgage Servicer holds the 1st and the 2nd loans) to put together a Short Sale transaction. It is very important however, that you let your Real Estate agent know if you have a second mortgage, home equity line of credit (HELOC), or any type of lien against your property such as a Home Owners Association lien, tax lien or mechanics lien. ·

My property is in rough shape and needs work; can I still do a Short Sale? 
Absolutely, Mortgage Servicers often take into consideration repair costs, as a factor, when determining whether to approve a Short Sale offer.

I am concerned about my credit, so how will a Short Sale affect my credit?
The goal in a short sale to avoid foreclosure. Consult your attorney to verify how this may affect your credit.

Can I receive cash from a Short Sale? 
No, the Short Sale is only designed to get you out of your mortgage debt rather than going through the entire foreclosure process. It is not a refinance option and you will be vacating the property, as you would, if you were going through foreclosure. However, there are particular government programs, depending on several factors, that you may or may not qualify to participate in that are designed provide limited cash to offset moving expenses and/or rental down payments. These programs would need to be discussed with your lender at the time the short sale was initiated.

What if my home is not worth what I purchased it for? 
This is the typical scenario for a short sale, when you can only sale it for less than it is currently worth. · What if I have filed bankruptcy? You will need to check with your Bankruptcy Attorney to verify if you can proceed with a Short Sale.

How do I know if I qualify for a short sale?
Swee Phoenix Homes Group can help you determine if your lender would consider approving a short sale of your property. Call 480.721.7253 today.

How much will this service cost?
Swee Phoenix Homes Group’s services won’t cost you a penny! The fees are paid by your lenders upon the successful sale of your property. They understand that sellers of short sales are experiencing hardship and as a result, are already having financial difficulties. The services are designed to help homeowners find a solution to the mortgage problem and sell their property ASAP!
If you need immediate assistance, please contact us today.

What is required from the property owner?

• Sign a listing agreement with a qualified Realtor.
• Cooperate with access, showing, offers and with the Realtor.
• Provide all written documentation of hardship as requested by your lenders and your Realtor.

What can I expect? 
Below is a partial list of the services provided by Swee Phoenix Homes Group:

• Help you avoid foreclosure and eviction 
• Help minimize credit damage 
• Counsel you through the process 
• Act as the liaison between you and the lender to ensure all parties work together towards a successful solution 
• Provide relief during a difficult time

IMPORTANT NOTICE: Keller Williams Realty Sonoran Living is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

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Short Sale vs Foreclosure

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A "Short Sale" is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a borrower cannot pay the loan on their property, but the lender decides that selling the property at a moderate lodd is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, when then involves hefty fees for the bank and poorer credit report outcomes for the borrower.

A foreclosure is the legal process by which an owner's right to the property is terminated, ususally due to default. This typically involves a forced sale of the property at public auction, with the proceeds being applied to the debt.

Forclosures or short sale are indeed going to affect the market value of neighboring homes in one way or another. Whenever a house sells in neighborhood, the amount at which the house is sold is noted and has an effect on general housing prices within the same locality. If your neighboring house is facing short sale or foreclosure, then the house sells for much less than it would have if it hadn't gone into foreclosure. Additionally, if that foreclosed house is similar to yours in size and attributes then this can depreciate the market value of your house.

The same is true when people sell their homes for less than the homes are actually worth because they just want to get rid of the loan. Every real estate transaction in your neighborhood has the potential to bring up or bring down the market value of your home. Every real estate market is different. Your real estate professional's main goal is to get you the best price in any martket.

“Why should a seller go through the short sale process rather than letting their house be foreclosed upon?”

While we cannot speak to every client circumstance, we can say one thing with complete conviction.  In almost all instances in which a potential seller is contemplating whether they should short sell their house or let it go through the foreclosure process, a short sale is the better option. The following are examples to consider:

Example A - Short Sale
Mr. Smith owns a home in which he has a mortgage balance of $220,000 and a current market value of $150,000. Mr. Smith has elected to short sell his property. His Realtor successfully obtains a buyer who puts forth an offer price of $120,000 (80% current market value according to Realty Trac Foreclosure Report 5/26/2011). After reviewing the buyers offer and the financial hardship information from Mr. Smith, Mr Smith’s bank agrees to accept the short payoff of $120,000 which would leave a deficiency balance of $100,000.

The transaction closes and is final.  Mr. Smith then pulls his credit report 30 days after the transaction takes place. On the report he notices that the mortgage trade line states “Mortgage debt was settled for less than full” and the balance on the mortgage is $0.  Mr. Smith is now on the road to financial recovery.

Example B - Foreclosure
For the ease of illustration we will use the same value and mortgage debt amounts as in Example A. However, Mr. Smith has elected to forgo the short sale process and let the bank foreclose on the property.  The bank holding his mortgage facilitates the proper legal procedures to foreclose on the property, all of which are costly.  Mr. Smith is notified and his property foreclosed upon of which is taken back by the bank to sell as an REO.

Six months later, the bank finally sells Mr. Smith’s home only they sell it for $90,000 (60% of current market value according to Realty Trac Foreclosure report dated 5/26/2011). Remember, as a short sale, the home would have sold for $120,000 keeping the deficiency to $100,000. In addition to the deficiency now being $130,000, the bank has elected to add on legal costs of $15,000 and asset preservation costs of another $5000 for a total deficiency liability of $150,000. Mr. Smith pulls his credit report 30 days after being notified that the bank has sold his property and of his liability.

On the report he notices that the mortgage trade line states “Foreclosure” and the balance is $150,000. Because of Mr Smith’s choice to choose foreclosure vs. short sale his road to financial recovery has taken a major detour. He not only has a foreclosure on his credit report but now has a much larger deficiency balance in which the bank, in most cases, will report on his credit report as a balance owed.

The Best Option is Clear
While the financial and credit advantages are clear when choosing a short sale over a foreclosure, other advantages are sometimes overlooked. The most important of all of them is maintaining the seller’s dignity and peace of mind. We have heard too many stories of families having to leave their homes because of a Sheriff’s order or some other type of legal action. The short sale process alleviates this negative social impact. The process puts the control back in the seller’s hands so that they can get back on the road to financial recovery and start providing for their families. In the battle of the two evils, a short sale always wins!!!

Click here for more information regarding Short Sale vs Foreclosure effect on credit score, credit history and future loan ability.

IMPORTANT NOTICE: Keller Williams Realty Sonoran Living is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.

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FHA Streamline Refinance

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FHA Streamline Refinance FHA has permitted streamline refinances on insured mortgages since the early 1980s. “Streamline refinance” refers only to the amount of documentation and underwriting that the lender must perform, and does not mean that there are no costs involved in the transaction. The basic requirements of a streamline refinance are:

• The mortgage to be refinanced must already be FHA insured
• The mortgage to be refinanced should be current (not delinquent)
• The refinance results in a lowering of the borrower's monthly principal and interest payments, or, under certain circumstances, the conversion of an adjustable rate mortgage (ARM) to a fixed-rate mortgage
• No cash may be taken out on mortgages refinanced using the streamline refinance process.

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