The Short Sale In A Nutshell
When a Trustor can no longer pay a loan in full, what often follows is foreclosure or even bankruptcy. This is a very depressing financial situation, but it can be solved with a little known alternative: the short sale.
Not all lenders will sign a short sale. This is because signing it means agreeing to be paid an amount less than what's due. The lender will be accepting a discounted payment for what they've lent out, in effect, forgiving the remaining deficiencies of the trustor or borrower. Of course, not all lenders will take a short sale -since pursuing foreclosure and taking the property as collateral will certainly make more financial sense.
A local real estate attorney should be consulted to determine whether the loan qualifies for a deficiency judgment or claim, as state laws vary. One should also consult an accountant to determine tax ramifications. The IRS may consider debt forgiveness as income. There is no guarantee that the lender will not legally pursuer a borrower for the difference between the amounts owed and the amount paid. This depends on individual state laws.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
It's hard to guess how long securing a short sale will take, but it's sure to be long, tedious, and tiring. Lenders usually say about 21 days or so for a case to be completely approved.
Not just for nonpayers, those who have never once paid a single installment can also avail -thanks in part to their negative equity. To short sell is to get out of a very rough and highly threatening financial situation, take it when you need it and take it if you can.
How the Short Sale works:
The process is quite simple to understand, it starts with the contract, then the authorization to release, and lastly the addendum. The warranty deed is also part of this whole process. What are really important to grasp in the process is the first two documents:
Contract: This can look like anything and can span from just a page to an entire mini book -it all depends on what it contains and how it's laid out. Just think of a generic contract, it can be really simple or really sophisticated. The addendum should be referred to, at any time the price is mentioned in the contract.
The basic document that contains nearly all vital info on conducting the transaction is contained in the addendum:
Origination of the contract
The Date
Names of the parties involved
The address
Tip: It's advised to list both the legal address and the simple address in the addendum -for the purposes of clarity and transparency.
Any investor, that is, the lenders, should know that in the foreclosure process, there is the opportunity to acquire bargain property -certainly a valid reason to agree to short sale. - 23212
Not all lenders will sign a short sale. This is because signing it means agreeing to be paid an amount less than what's due. The lender will be accepting a discounted payment for what they've lent out, in effect, forgiving the remaining deficiencies of the trustor or borrower. Of course, not all lenders will take a short sale -since pursuing foreclosure and taking the property as collateral will certainly make more financial sense.
A local real estate attorney should be consulted to determine whether the loan qualifies for a deficiency judgment or claim, as state laws vary. One should also consult an accountant to determine tax ramifications. The IRS may consider debt forgiveness as income. There is no guarantee that the lender will not legally pursuer a borrower for the difference between the amounts owed and the amount paid. This depends on individual state laws.
To pursue a short sale, consult your real estate attorney if your case is eligible -certain state laws only allow specific values for a loan to qualify for a deficiency judgment in a short sale. Also, consult an accountant, the IRS may consider the unpaid debts as income, affecting your tax records. Also, the borrower is not guaranteed that the lender will not pursue them for the remaining debts beyond the debt already forgiven -an especially good reason to consult your attorney.
It's hard to guess how long securing a short sale will take, but it's sure to be long, tedious, and tiring. Lenders usually say about 21 days or so for a case to be completely approved.
Not just for nonpayers, those who have never once paid a single installment can also avail -thanks in part to their negative equity. To short sell is to get out of a very rough and highly threatening financial situation, take it when you need it and take it if you can.
How the Short Sale works:
The process is quite simple to understand, it starts with the contract, then the authorization to release, and lastly the addendum. The warranty deed is also part of this whole process. What are really important to grasp in the process is the first two documents:
Contract: This can look like anything and can span from just a page to an entire mini book -it all depends on what it contains and how it's laid out. Just think of a generic contract, it can be really simple or really sophisticated. The addendum should be referred to, at any time the price is mentioned in the contract.
The basic document that contains nearly all vital info on conducting the transaction is contained in the addendum:
Origination of the contract
The Date
Names of the parties involved
The address
Tip: It's advised to list both the legal address and the simple address in the addendum -for the purposes of clarity and transparency.
Any investor, that is, the lenders, should know that in the foreclosure process, there is the opportunity to acquire bargain property -certainly a valid reason to agree to short sale. - 23212
About the Author:
Know about short sale an alternatives to bankruptcy or foreclosure only at Don Burnham's website http://www.weknowthewayback.com. Visit today to know all about short sale!
posted by X - Men @ 1:00 AM
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