Far too many homeowners throughout the Sacramento/Elk Grove area are having trouble making their mortgage payments and are stretched financially to the point that they are just one “life event” away from foreclosure. In the Sacramento/Elk Grove area we are also faced with a slipping market and many homeowners owe more on their home than they are currently worth.
Whether you need help trying to hold on to your home or in selling your home, Lori Mode & Bruce Durham are here to help. We are here to provide you with information so that you can make an informed decision and give you options if you are a homeowner experiencing mortgage difficulty.
We will provide you with a FREE report to explain your options and help you decide the course of action best for you. In this troubled time, it is vital for you to have all the necessary facts to make an informed decision. As an agent with CDPE Designation, Lori has a unique appreciation of the many factors affecting this market and she knows that there are options available to you.
If you would like to know more about your options, please call us at (916) 405-5737 or to see if you qualify for a short sale complete our form and we will be in contact shortly.
SHORT SALES…
The Short Sale process may provide some relief for homeowners facing these difficult times. The following are a list of benefits that a short sale may provide you as a homeowner:
• Your home gets sold and the mortgage is fully paid off. The mortgage lender accepts a discounted payoff.
• You have no out-of-pocket costs as the mortgage holder pays virtually all sales costs including title and escrow, commission, and approved property repairs.
• Your credit record is protected from a foreclosure.
• You can move forward with your life without having to worry about your house and your mortgage.
Definitition of a Short Sale
A short sale occurs when a home is sold and the sales proceeds do not fully pay off the loan or loans on the property and one or more lenders accept a discounted payoff and allow the sale to close escrow. Contrary to popular belief, it is not difficult to qualify for a short sale.
WHO IS A CANDIDATE FOR A SHORT SALE?
Homeowners that truly can’t afford to make their mortgage payments because of either a hardship or they have gotten over their head because their mortgage payment adjusted up to a point beyond their ability to pay. Among the hardships that frequently lead to difficulties with mortgages are divorce, illness, family crisis, reduction in income, job loss or relocation. A good Short Sale candidate has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans/debt that are secured against their property.
The lender is going to look for circumstances beyond the homeowners control leading to a hardship to justify their approving a Short Sale. Are you having trouble making your mortgage payment? Have you been faced with a hardship?
Call today for a free confidential, no obligation consultation to see if Lori Mode and Bruce Durham can help you with your difficult situation. Our services are paid upon close of escrow from the proceeds that the mortgage holder agrees to disburse. Don't delay call Lori Mode today at (916) 230-0371.
California Foreclosure Law Summary-Quick Facts
This is a list of the documents we will need to begin the short sale processing:
- Copy of most recent mortgage statement
- Personal Financial Statement (Fannie/Freddie Form)
- Two (2) years tax returns with copy of extension if possible
- Two (2) most recent pay stubs.
- Two (2) most recent bank statements for all bank accounts and brokerage accounts EXCEPT information on retirement accounts.
- Hardship letter.
- Signed Letter of Authorization, authorizing the lender(s) to speak with us.
With these documents we create a package for your lender(s) which helps them understand why you require a real estate short sale. We then submit this to the appropriate department at your lender, once we have an accepted purchase offer for your home.
Frequently Asked Questions & Answers
Who is eligible for a short sale....would you qualify for a short sale? 
A good Short Sale candidate is a homeowner who is behind on their mortgage payment and is unable to keep up with all of their monthly obligations. There are many reasons you might fall behind on your mortgage payments...divorce, job loss, job relocation, sudden change in your monthly income, unexpected medical expenses, or adjustment in mortgage payment or unforeseen increase in living expenses. Also a good Short Sale candidate has no equity in their home. They are not able to sell their home and pay off all of the outstanding loans that are secured against their home.
But I have 2 loans, will I still qualify for a short sale?
It is possible to work with both lenders to approve a short sale. Even if the value of the home is below the balance of the 1st mortgage, we can normally get the two lenders to cooperate. And sometimes, both loans are held by the same mortgage company - this does make the process easier. In the end, neither lender wants the property back through yet another foreclosure.
And why would your bank agree to a short sale?
Banks really are not in the business of owning homes. It is much more cost effective for a bank to do a short sale rather than going through the foreclosure process on a home. Banks make their money from receiving monthly mortgage payments, not by owning real estate. While banks will take a loss doing a short sale, they can often minimize their loss by as much as 10-20% over a foreclosure.
Are there any credit consequences to a short sale?
A majority of homeowners contemplating short sales get behind in their payments and
the moment you go 30+ days behind on your payments, your bank has the right to report to all of the credit bureau's that you are 30 days behind on your payments. After going through a short sale or a foreclosure, most people will have multiple 30, 60 and 90+ day late payments reported on their credit report.
When the short sale is completed, most banks will report to your credit report that your account has been "paid in full for less than the full amount". Your credit report may also be marked as "settled". It is important to keep in mind that each lender has a different way of reporting that a Short Sale was done, but this is the most common language that is seen. If your home were to go to foreclosure you woould most often see the bank report "Foreclosure" on your credit report.
It is difficult to guage how much of a credit scoring affect a short sale has vs. a foreclosure. By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly. This can be accomplished by working with a Credit Scoring Expert for specific ways in which to improve your credit after the short sale is complete.
I am not behind in my payments, will my lender approve a short sale?
The short answer is, it depends on your lender. Some lenders may require that you are behind on your payments before they will consider approving a short sale. However, many lenders now are approving short sales when the homeowner has never missed a mortgage payment. The homeowner just happens to be in a negative equity position and need the short sale in order to sell their home. One way to find out whether your lender will accept a short sale file for approval on a loan that is current is by submitting a short sale file to your lender.
I'm behind on my payments, how long will it take for the bank to foreclose on my home?
Most promissory notes give the bank the right to start the foreclosure process or file the "notice of default" as soon as you are 30 days behind on your mortgage. Although the banks have this right, most banks will not proceed with the filing of the notice of defaultuntil you are 90 days or more behind on your payments. The bank has the sole discretion on when they want to begin the foreclosure proceedings and all banks made this decision differently and within different parameters.
When the official "notice of default" or "foreclosure notice" is filed (whether it is filed after you miss 1 mortgage payment or 3) there is a 91 day period of time between the filing and the filing of the "notice of trustee sale".
How long does the process take?
All short sale situations are unique and follow their own timeline, The actual negotiation or approval process can take as little as 2 weeks or as much as 3 months to complete. On average most short sales take between 30 - 60 days from the date the offer is presented to the lender to the date of the Short Sale approval.
Many variables are associated with this timeframe:
- How quickly an offer is generated and accepted by the seller
- How quickly BPO's are completed when ordered
- How quickly the lender responds to the offer (dependent on the quantity of other short sales the lender is processing)
- How many lien holders need to provide approval
Once the Short Sale approval has been received from the bank or banks, the buyer should be prepared to close escrow within 21 - 30 days.
What happens if there is a foreclosure sale date scheduled during this process?
Lenders often times will extend the foreclsoure sale date if there is an active short sale negotiation going on. We get foreclosure sale dates extended every month so please don't ever let s sale date scare you away from one of our listings. Your foreclosure sale will usually be suspended during the short sale process.
How much will a short sale cost me?
A short sale should not cost you anything at closing for sales costs. We strive to complete the entire short sale process without having you, the seller, bring any money to closing. In most cases borrowers pay no sales costs if the lender approves the Short Sale. All commissions, title and escrow fees, and even most repair expenses may be paid by the lender as part of the Short Sale approval.
There are some items that certain lenders will not pay however. These items may include unpaid Homeowners Association dues, delinquent utilities, certain repairs - especially cosmetic. If you know you are behind on association dues or utilitites, it would be a good idea to set aside some money for these at the close of escrow.
Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.
We work with a negotiating team to help us with the short sale approval process. They understand how to effectively gather and present the information that lenders require. They have excellent working relationships with the Loss Mitigation Departments. The cost of using a 3rd party negotiating team is paid from our commission at the close of escrow.
Remember there are no commissions or fees paid unless the short sale is approved and escrow is closed...the commissions will be deducted from the sales proceeds the bank receives, not paid by you as the homeowner.
Why not just let my lender foreclose?
No! This will affect your credit and taxes much more than the short sale process! What is the first thing banks must do to foreclosure on a property? The foreclosure process is a legal process and it involves time and money to the banks. Once the bank gets the property back through the foreclosure process they must often sell it for MUCH LESS than market value and pay Realtor commissions and closing costs. Doesn't it make more sense for them to take at or a little below fair market value through the short sale process saving the additional foreclosure costs and time?
And even when they do sell it through foreclosure....this may NOT remove your obligation to repay the remaining balance!
When should we begin working on the Short Sale together?
Ideally we would like to begin working on your Short Sale as soon as possible! If you recognize that you are unable to keep up with your payments and will be falling 30 days behind please contact us immediately.
We appreciate the opportunity to earn your business.
To find out if you qualify to do a short sale complete our form and we will contact you shortly or call us at (916) 230-0371.
