Realty Choice Short Sale Program
According to national statistics on housing, at the present time, one out of every four homes in America are “upside-down in value” (worth less than the amount owed). Homeowners in this situation, facing economic hardship, do have options available to them to avoid financial disaster. The federal government is now offering incentives to banks and other lenders to encourage assistance to homeowners with Short Sales rather than foreclosure. Money is also available for the homeowner to help with property loss and vacating expenses through this policy.
The Realty Choice Short Sale Program is designed to help you understand this process and assist you with all the necessary information and documents needed to negotiate a mortgage payoff settlement with your lender. We have attached some frequently asked questions and answers about this process with a list of the usual required documents.
Frequently asked questions about Short Sales
What is a Short Sale?A Short Sale is a transaction of real estate that takes place when a property is sold for less than the owed amount on the mortgages and liens due. All the lenders who own the underlying mortgages and liens accept less than the full payoff as a settlement. This allows the property to transfer to a buyer even though lenders did not receive the full amount they are owed. Short Sales usually take place during the foreclosure process.
Foreclosing on a property is a problem for everyone: the lender, the homeowner, and the community. Because lenders lose a great amount of money during the foreclosure process, they are willing to entertain other options, such as Short Sales. They willingly accept a loss on the sale because they perceive this to be a better financial decision than foreclosing.
The option to do nothing:
The option to sitting back and do nothing may be very harmful to the stability of homeowner’s financial future. Many people don’t realize that a lack of action, to deal with the problem, usually leads to a much higher consequential loss than necessary. This typically eliminates the ability to recover personal financial standing and credit within in a reasonable amount of time.
Who qualifies for a Short Sale?
Short Sale is an option when a homeowner is not able to pay their mortgage payments because of some hardship such as: loss of job, illness, divorce, or increase of mortgage payments. As a result it then becomes difficult to pay for housing and living expenses. Once the homeowner falls two months behind on the mortgage payment, Short Sale eligibility usually can be applied for.
Items Required From Homeowners
1. Advocacy Letter: Signed “Third Party Authorization” form
2. Hardship Letter: Signed letter explaining the cause of default or imminent default including:
When did the hardship begin?
Has it been resolved? If not, when do you think it will be resolved?
Have any actions been taken to resolve the situation? (Example: have you contacted a credit counselor or cut optional household expenses such as cable, etc.)
3. Financial Analysis Form: Personal Financial Statement. (If self-employed, a current income statement, balance sheet, statement of owner’s equity and a 6-month profit and loss statement).
4. Copy of two recent pay stubs
5. Copy of your last two years tax returns with all schedules
6. Copy of your last two bank statements
7. Most recent mortgage statement
8. 4506-T Request for Transcript of Tax Return - signed
9. Dodd-Frank Certification signed