The current buzz words in the Real Estate industry are “short sale“. Recent years of housing price increases, relaxed lending qualifications and adjustable rate mortgages coupled with the troubled economy have left millions of Americans facing the spectre of foreclosure. For many people this is a tremendous source of stress, frustration and sleepless nights. This when a short sale expert can ease those burdens and help put this painful problem in your past.
What exactly is a “short sale“?
A short sale is when a lender agrees to take less than the mortgage amount to satisfy the lien.
Who is the ideal candidate for a short sale?
- Owner Must Qualify For Relief of Debt
- Owner Must Show Some Financial Hardship That Is Not Temporary
- Owner Has To Owe More Than The Property Is Worth
It is important to understand that this creates a deficiency amount which can be handled in a number of ways. When we negotiate our short sale packages, we ask for the accepted offer to satisfy the lien “in full”. This means that the deficiency balance is settled as part of the accepted short sale offer and alleviates you of any further obligation to the lender. However, if the lender will not accept the offer as “paid in full”, then the lender may ask for a promissory note for the remaining balance on the loan. If no payment arrangement is made, the lender may seek a deficiency judgment against you. Absent a deficiency judgment, you will be sent an IRS form 1099C. This form is required any time there is a forgiveness of debt and the amount listed on the 1099C may have to be treated as income. Check with a tax professional to determine if the amount forgiven will be subject to federal taxes. In most instances where insolvency can be proven, the 1099C amount will not need to be treated as income. With that being said, to this point we have not had a lender deny our offer as “payment in full” for their mortgage obligation, triggering only a 1099C from the lender.
Because of the sheer volume of foreclosures, many companies have started offering “short sale services”. This is not the time to stake your financial health on an inexperienced short sale provider. There are numerous forms and documents that make up a successful short sale package. It is not unlike the process you went through to qualify for your original mortgage. Our experience over the years has shown us several tricks of the trade that have allowed our loss mitigators a high rate of success in getting our short sale offers approved.
Remember, a foreclosure will stay on your credit for seven years. It will decrease the likelihood of getting credit in the future and if you do get a loan, it will drastically increase the cost of that loan due to higher interest rates. One can only imagine the impact that the stress and anxiety creates within a family environment. If a short sale is successfully negotiated, you may be eligible to purchase another house in as little as 2 years.
Call us today at 910.538.3663 to schedule a FREE, Confidential and No Obligation Consultation or fill out the form below.
