Who’s Who In The Short Sale

• We, at Rubicon Crossings Realty, are the agents & have have the same fiduciary duty to the Seller/Buyer as we would have with any other listing or transaction. The only difference is the Seller must obtain the approval of the Servicer/Lender in order to deliver clear Title on the contract they executed with the Buyer.

• The Agent will forward the Demand/Approval letter(s) to the Title Co/Escrow Co and coordinate the Final HUD 1.

The Agent will then engage in the negotiation with the Servicer/Lender.

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How we HandleThe Short Sale Listing

• List the property at a 30 day Fair Market Value• List the property in “AS IS” condition• List the property “Subject to Third Party

Approval” • The Homeowner reviews and signs the Listing

Agreement with the list price and terms

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The Short Sale Documents

• Listing Agreement• Offer/ Purchase Agreement• Buyer’s Pre-Approval Letter or

Proof of Funds• Authorization to Release Information• Financial Form

Doc’s Continued

• Two Years Tax Returns• Two months most recent Pay Stubs• Two months most recent Bank Statements• Hardship Letter signed and dated• HUD 1 or Seller’s Net Sheet

• If homeowner cannot provide check stubs, bank statements, or Tax Returns have them write a statement to that fact, sign and date it

What About JR. ? ? ?

• Confirm whether or not there are Jr. Liens• Collect the same information as you did for

the First Mortgage (account number, mortgage company, pay-off and contact numbers etc…)

• Collect contact and pay-off information regarding any & all lien holders (Tax liens, IRS liens, Mechanic liens and HOA fees etc…)

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• When a second is involved you want to make sure that you verify the minimum and maximum– The Maximum the first will allow the second to

receive– The Minimum the second will accept

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MAXIMUM AND MINIMUM

Why a Pay-Off ?

• We order a Payoff for the First, the Second & Third Mortgages if applicable

• The Pay-Off (s) are the entire amount due the Lenders.

• The Pay-Off is to establish that the Sale will short the Lender (A Short Sale)

• Do not delay an Offer waiting for a Pay-Off

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The Approval Letter &

Final HUD 1• We usually receives the Approval Letter– We MUST have an Approval Letter for each Lender/Loan– We will need a Release Letter for any liens or judgments

• The Escrow, Title Company or Attorney prepares the Final HUD 1 EXACTLY as the Approval Letters state

The numbers on the HUD 1 cannot deviate from the instructions on the Demand/Approval Letter(s)

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Fees The Servicer Will Consider

• Property Taxes• Owner’s Title Policy• County Transfer Tax• Escrow Fee• Commissions • (May be reduced)• Jr. Lien Holders• (Amount be negotiated for release)

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Fees Not Generally Paid

• Repairs Property sold ‘As Is’• Inspection fees, Pest Inspections, Pest repairs• Fees normally paid by the Buyer• Survey Costs• Junk Fees• Utility Bills unless they are a lien on the property• *Buyer’s Closing Costs in excess of 3%

*Based on BPO Value

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Frequently Asked Questions

Q Can the Seller just sign a deed in Lieu (DIL)?A. Generally, No. • Requirements: Listed 90 days w/o offers, clear title,

full financial package, and FC Date cannot be within 30 days.

Q How long does it take to get a short sale closed? A. It should take 60-90 daysQ How is the Seller’s Credit Affected? A. May appear as: Settled, Paid, Short Sale, or Offer and

Compromise.11

Frequently Asked QuestionsQ What is a short sale?A. A Real Estate transaction in which, the Lender allows a property to

be sold for less than the amount owed on a mortgage and takes a loss. (Wikipedia)

Q What is the difference between a foreclosure and a short sale?A. Foreclosure has a more negative impact on a credit report. If

foreclosed the Lender may pursue a deficiency judgment and pursue future payoff, if it is a short sale the Lender will not.

Q What are the Tax implications on a short sale or foreclosure?A. Both can be taxable. Deficiency amount will often be considered as

income for Tax purposes. • For more accurate information contact the Homeowner’s Tax

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Frequently Asked QuestionsQ Why do Lenders foreclose?A. Lenders, Servicers and Banks, are corporations. These corporations

are driven to make money, not to lose it. They must answer to their shareholders just like any other corporation. These corporations do not want to own property. The only reason they foreclose is to gain control of the property or asset and recover as much of the principal loan balance, accrued interest, late fees, and penalties, taxes they paid on behalf of the homeowner, court costs and attorney fees. In most states the laws are written so that the lender can only recover these widely accepted losses.

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