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Short Sales

Short sales are a way to save a homeowner from having the bank sell their house at the sheriff sale. Once it is sold at the sheriff sale, the homeowner has a foreclosure on their credit report. This is about the worst thing that can happen to your credit report. It will deduct about 200 credit points from your credit score.

If the homeowner can sell their house BEFORE the sheriff sale, no sheriff sale takes place. This stop then Stops the Sheriff and stops the foreclosure process. The word foreclosure may show on the credit report, but it should then say “withdrawn” and less credit points are deducted from the credit score. Therefore the homeowner can get credit again to buy a car or another house much sooner.

What do I as a homeowner have to do to get a short sale?
As a homeowner, you need to find a buyer for your house. If there is no equity to pay a Realtor, then an investor is your likely choice to buy the house and work the short sale with the bank.

Investors have the expertise to negotiate with the banks and demonstrate why the house can’t always be sold for top dollar. The bank, of course, is always looking to get a sale that will completely pay off the whole amount of the mortgage. And, depending on the condition of the house, that is often not possible.

Investors will often buy the house themselves, do the repairs to the house that need to be done and be able to sell it for full market value or know of someone else who would want the house and do that work. Either way, you have a buyer for your house, the house is purchased before the sheriff sale and the foreclosure is off of your credit report.

What Banks Will Do a Short Sale?
All banks will do a short sale when the mortgage is past due. That could mean one month or six months past due. In today’s market I’ve know banks that will take a short sale before the mortgage is late. The homeowner just called the bank and said they would not be able to keep up the payments any longer. The bank told them to find a buyer and they would do a short sale.

All banks will do a short sale. Not all banks will take a big enough discount to make it worthwhile for the investor due to the amount of the repairs. This question must always be asked because you never know what the answer will be “unless you ask.”

If you see words like government foreclosure, Foreclosure Homes, Foreclosure List, HUD Foreclosure, VA Foreclosure, fore closed properties, etc. a short sale cannot be done on these properties. They have already been sold back to the bank at the sheriff sale. It is too late for a short sale or a pre-foreclosure sale because the bank that held the mortgage and started the foreclosure procedure now owns the property – not the homeowner who was originally on the deed and in default on their mortgage.

Are there rules for Short Sales?
There are rules to follow for short sales. Each government backed loan, such as VA (Veterans Administration) Loans, HUD (Housing and Urban Development) Loans, FHA (Federal Housing Administration) Loans, Freddie Mac and even Fannie Mae all have specific guidelines that need to be followed to get a short sale. GSP Family, LLC has been successful in all of the above so don’t hesitate to give us a call.

We Will Help. 954-944-5227

Additional Mortgages and Liens
What if I have a second mortgage or even a third or fourth lien on my property? We will negotiate with any additional lien holders to get them to take less than is actually owed. They have to be in agreement or the house can’t be purchased. If it is a lien for unpaid services or another mortgage, we will work with them and pay them off.

What Happens to the money that is not paid?
The banks and creditors have 2 choices what to do with the amount that is not paid. They can either “forgive” the debt and not expect it to be paid. Or they can expect it to be paid and attach the difference to the homeowners credit, hoping that at some point the homeowner will come into money and pay the bill.

If the debt is “forgiven,” it is a good possibility that the homeowner will be sent a 1099 on the amount that is not paid. A 1099 often means the receiver will owe taxes on that amount.

There are a couple ways to get around this but right now until the end of 2009 (unless the bill is re-signed to extend a longer time limit) homeowners don’t owe any taxes on that amount. This is a government regulation that says that the mortgage must be

  • The mortgage holders primary residence and
  • Less than $2,000,000.00 in value.

That includes a lot of people!

Davino and Associates has the answers for this situation if you are an investor and if the law has expired. Give us a call! We will listen!

We Will Help Call Greg  Now! 954-944-5227

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