A Short Sale occurs when a homeowner sells property worth less than the mortgage debt, transfers the proceeds from the sale to the lender and the lender agrees to accept less than the balance owed and typically forgives the deficiency balance.
Why do Banks approve Short Sales?
Banks are in the business of lending money, not stockpiling real estate. Also, the foreclosure process is very expensive for banks (property maintenance fees, taxes, foreclosure attorney’s fees, sheriff’s fees, etc). A private sale of the property is almost always a better deal for the lender.
How long does it take to get a response from a Bank?
Buyers and sellers must be patient as lenders are inundated with Short Sale cases because of the current economic climate. Never expect to receive a response in a day or two. It could take as long as eight (8) to twelve (12) weeks.
How long does it take to close a Short Sale deal?
It typically takes a good Short Sale team (Attorney & Realtor) approximately 90-120 days to close a deal from accepted offer to real estate closing.
Does the seller get any moving assistance?
Homeowners can recieve $3,000 in relocation assistance through the HAFA program if their lender participates in the HAFA program. Most lenders participate in the HAFA program (Citibank, Wells Fargo, Bank of America, Wachovia, Chase, WaMu).
Who’s eligible for HAFA?
HAFA eligibility requirements:
1. Only applies to homeowner’s principal residence
2. Borrower is experiencing a financial hardship (job loss, divorce, medical emergency)
3. Borrower is at least 60 days delinquent
4. Loan orignated on or before 1/1/2009
5. Mortgage is less than $729,750.00
What’s the tax consequences of a Short Sale?
On December 20, 2007, President Bush signed into law the Mortgage Forgiveness Debt Relief Act, which is designed to provide relief for financially strapped homeowners facing foreclosure. No taxes will be due on the value of any debt forgiven or written off as a result of a Short Sale on a primary residence. This tax relief is due to expire on 12/31/2013.