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The Short Sale ProcessThe Short Sale Process

• What is a Short Sale?What is a Short Sale?• Who Qualifies For a Short Sale?Who Qualifies For a Short Sale?• What Will Be Required of You?What Will Be Required of You?• What Should You Expect in the Process?What Should You Expect in the Process?• What are the Benefits of a Short Sale?What are the Benefits of a Short Sale?• Why Working With Your Real Estate Agent is a Great Decision?Why Working With Your Real Estate Agent is a Great Decision?• Answers to Frequent QuestionsAnswers to Frequent Questions

WelcomeWelcome. You have contacted an agent . You have contacted an agent to help you sell your home as a short sale. to help you sell your home as a short sale.

We have made this recorded presentation to We have made this recorded presentation to help answer your questions about the help answer your questions about the

short sale process. short sale process.

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What is a Short Sale?What is a Short Sale?

• Your home may be over-leveraged or “underwater”Your home may be over-leveraged or “underwater”• You may behind on payments and cannot sell for high enough to You may behind on payments and cannot sell for high enough to

cover what you owe plus other required fees to close.cover what you owe plus other required fees to close.• Lenders created short sales as a foreclosure alternativeLenders created short sales as a foreclosure alternative• Lenders would rather allow you to short sale versus foreclosing.Lenders would rather allow you to short sale versus foreclosing.• Foreclosing on properties costs lenders moneyForeclosing on properties costs lenders money

A Short Sale is when your mortgage A Short Sale is when your mortgage lender(s) and/or lien holder(s) agree lender(s) and/or lien holder(s) agree

to take less than is owed so to take less than is owed so that you can sell your home. that you can sell your home.

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Who Qualifies? And Who Qualifies? And How?How?

However, each Lender and Loan Type hasHowever, each Lender and Loan Type hasa different set of requirements.a different set of requirements.

• Please be sure to tell your agent: Your Lender & Loan TypePlease be sure to tell your agent: Your Lender & Loan Type

• This information can be found on a current mortgage statement or This information can be found on a current mortgage statement or the settlement papers from your closing. the settlement papers from your closing.

• If you do not know the loan type and lender, be sure to give your If you do not know the loan type and lender, be sure to give your agent authorization to call your lender.agent authorization to call your lender.

Most people facing foreclosure or a Most people facing foreclosure or a financial hardship who cannot sell their financial hardship who cannot sell their

home for what is owed home for what is owed will qualify will qualify

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Who Qualifies? And Who Qualifies? And How?How?

• Be experiencing a True Financial HardshipBe experiencing a True Financial Hardship

• Be in default on your mortgageBe in default on your mortgage

• Facing imminent default while in a ‘Must Facing imminent default while in a ‘Must Sell’ situationSell’ situation

• Have NO Equity in your homeHave NO Equity in your home

• Have NO available assetsHave NO available assets

• Have a lender and loan type with a clearly Have a lender and loan type with a clearly defined short sale processdefined short sale process

In General, to Qualify you must simply: In General, to Qualify you must simply:

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So, What do you need So, What do you need to do?to do?

• Your Lender will require copy of Your Lender will require copy of a Listing Agreement and a Listing Agreement and showing historyshowing history

• Your Lender wants to see that Your Lender wants to see that you have made a good effort to you have made a good effort to sell your homesell your home

First and Foremost:First and Foremost:Get Your Property Listed for SaleGet Your Property Listed for Sale

at fair market valueat fair market value

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The Paperwork ListThe Paperwork List

• Handwritten Hardship LetterHandwritten Hardship Letter Explain your situation, when it started, how it happened Explain your situation, when it started, how it happened

and what you are doing to fix itand what you are doing to fix it

• A Financial Worksheet- Your BudgetA Financial Worksheet- Your Budget Everything that costs you money on a monthly basisEverything that costs you money on a monthly basis

• 2 Years Most Recent Tax Returns2 Years Most Recent Tax Returns With W-2s and all schedulesWith W-2s and all schedules

• 2 Months Recent Bank Statements2 Months Recent Bank Statements All accounts and all pagesAll accounts and all pages

• 2 Most Recent Pay-Stubs2 Most Recent Pay-Stubs Or, if unemployed, a statement stating such

Your Lender Will Require the following:Your Lender Will Require the following:

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The Paperwork ListThe Paperwork List

• An Authorization to Release An Authorization to Release • Copy of recent mortgage Copy of recent mortgage

statement(s)statement(s)• Copy of any correspondence Copy of any correspondence

received regarding the property from received regarding the property from attorneys, lien holder(s), bankruptcy attorneys, lien holder(s), bankruptcy trustee, or probate.trustee, or probate.

• Any paperwork regarding any other Any paperwork regarding any other liens and/or judgments.liens and/or judgments.

• Property tax recordsProperty tax records• HOA informationHOA information• Negotiation DisclosuresNegotiation Disclosures

Your Agent Will Require the following:Your Agent Will Require the following:

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Help Sell Your HomeHelp Sell Your Home

• Allow showings Allow showings

• Keep the home show-able Keep the home show-able

• Stay available for your agentStay available for your agent

• Stay in communicationStay in communication

• Cooperate with Marketing effortsCooperate with Marketing efforts

• If vacant: leave on utilities if possibleIf vacant: leave on utilities if possible

Short Sale Success will be easier if you assist with the process.Short Sale Success will be easier if you assist with the process.

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What to Expect?What to Expect?

1.1. Home is MarketedHome is Marketed

2.2. Purchase Offer ReceivedPurchase Offer Received

3.3. Short Sale Package SubmittedShort Sale Package Submitted

4.4. Bank Orders AppraisalBank Orders Appraisal

5.5. NegotiationsNegotiations

6.6.Property is SoldProperty is Sold

The Process could take 3-4 months or longer to complete. The Process could take 3-4 months or longer to complete. Patience and Communication are the keys to success.Patience and Communication are the keys to success.

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Foreclosure?Foreclosure?

URGENT MESSAGEURGENT MESSAGE

If you are scheduled for a foreclosure sale If you are scheduled for a foreclosure sale date, be sure that your agent is date, be sure that your agent is

immediately aware and provide them immediately aware and provide them with any foreclosure paperwork you with any foreclosure paperwork you

have. have.

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The Benefits of Short The Benefits of Short Sale?Sale?

NO Foreclosure on CreditNO Foreclosure on Credit Generally NO money needed to close Generally NO money needed to close NO repairs necessary – Sell AS-ISNO repairs necessary – Sell AS-IS NO taxable event for those that qualifyNO taxable event for those that qualify NO deficiency judgment if negotiatedNO deficiency judgment if negotiated Out from underneath your mortgage debtOut from underneath your mortgage debt NO Need to file bankruptcyNO Need to file bankruptcy A positive step towards home ownership A positive step towards home ownership

in only 24 monthsin only 24 months

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Why Your Agent is Why Your Agent is Best?Best?

They Know this MarketThey Know this Market They Know how to They Know how to

get your home SOLDget your home SOLD They work with a team of They work with a team of

Short Sale ExpertsShort Sale Experts They are Ethically Obligated to They are Ethically Obligated to

Protect Your InterestsProtect Your Interests

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FAQFAQHow much time do I have? Do I have to start now?How much time do I have? Do I have to start now?

It is best to begin a short sale when you realize you can It is best to begin a short sale when you realize you can no longer afford the mortgage, so that your property can no longer afford the mortgage, so that your property can be marketed properly and you can receive a high offer. be marketed properly and you can receive a high offer. The earlier you start, the higher our likelihood of The earlier you start, the higher our likelihood of success.  Remember that your lender requires a success.  Remember that your lender requires a purchase offer to review your eligibility for a short sale purchase offer to review your eligibility for a short sale and it make a few weeks to get a solid offer.and it make a few weeks to get a solid offer.

Do I need to be in default to qualify for a short sale?Do I need to be in default to qualify for a short sale?NO, more and more lenders are considering short sale NO, more and more lenders are considering short sale requests from homeowners who are not in default. requests from homeowners who are not in default. However, you must be experiencing a financial hardship However, you must be experiencing a financial hardship that points to imminent default if you are unable to sell. that points to imminent default if you are unable to sell.

What will happen If I do nothing?What will happen If I do nothing?If you do nothing and are not making your mortgage If you do nothing and are not making your mortgage payments, your lender will foreclose. You will have a payments, your lender will foreclose. You will have a foreclosure on your credit report, be liable for any foreclosure on your credit report, be liable for any deficiency, and/or subject to a taxable event.deficiency, and/or subject to a taxable event.

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FAQFAQWill I get any money when the property sells?Will I get any money when the property sells?

NO, for the majority of loan types you are not allowed by your NO, for the majority of loan types you are not allowed by your lender to receive any proceeds from the sale of your home. If lender to receive any proceeds from the sale of your home. If you have an FHA loan, you may qualify for their pre-you have an FHA loan, you may qualify for their pre-foreclosure sale program that does have a selling incentive. foreclosure sale program that does have a selling incentive.

What if I file bankruptcy?What if I file bankruptcy?Filing bankruptcy will not stop the foreclosure process, just Filing bankruptcy will not stop the foreclosure process, just delay it. The property will eventually be discharged from delay it. The property will eventually be discharged from bankruptcy protection and be back in the foreclosure process bankruptcy protection and be back in the foreclosure process where it was when bankruptcy was filed. For further where it was when bankruptcy was filed. For further bankruptcy information, please seek the advice of legal bankruptcy information, please seek the advice of legal counsel.counsel.

What is better on my credit – Foreclosure or Short Sale?What is better on my credit – Foreclosure or Short Sale?Please consult your own financial advisor or the credit Please consult your own financial advisor or the credit bureaus directly for the answer to this question. From bureaus directly for the answer to this question. From experience only, we can say that foreclosure is much more experience only, we can say that foreclosure is much more damaging to your credit. A short sale will most commonly be damaging to your credit. A short sale will most commonly be listed as “settled debt” and is much less harmful to your credit.listed as “settled debt” and is much less harmful to your credit.

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FAQFAQWill I be liable for my lender’s financial loss?Will I be liable for my lender’s financial loss?

Depending on your situation you may or may not receive a Depending on your situation you may or may not receive a deficiency judgement or taxable event. It is best to consult an deficiency judgement or taxable event. It is best to consult an attorney for advice regarding any debt liability. attorney for advice regarding any debt liability.

Now, there have been recent changes in the law that reduce Now, there have been recent changes in the law that reduce homeowner tax liability. The site for that information is homeowner tax liability. The site for that information is http://www.irs.gov/individuals/article/0,,id=179414,00.html Most tax consequences Most tax consequences have been done away with for primary loans on primary have been done away with for primary loans on primary residences. residences.

Regarding deficiencies – you can have your agent request in Regarding deficiencies – you can have your agent request in the negotiations a full release of lien and that your lender the negotiations a full release of lien and that your lender consider the debt settled or satisfied. The bank has the right consider the debt settled or satisfied. The bank has the right to ask you to sign an unsecured note or to ask you contribute to ask you to sign an unsecured note or to ask you contribute money at the time of closing. Be sure your agent negotiates money at the time of closing. Be sure your agent negotiates the best outcome for you..the best outcome for you..

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FAQFAQWhat other advice should I seek?What other advice should I seek?

Be smart. Always seek professional advice from a qualified Be smart. Always seek professional advice from a qualified attorney and an accountant specializing in Short Sales/Pre-attorney and an accountant specializing in Short Sales/Pre-Foreclosure Sales.Foreclosure Sales.

What about the federal government bailout programs?What about the federal government bailout programs?To determine your eligibility, please visit To determine your eligibility, please visit www.financialstability.gov

Real Estate Solutions, LLCReal Estate Solutions, LLCDeirdre Vanko, Realtor/BrokerDeirdre Vanko, Realtor/Broker608.831.0818608.831.0818dvanko@tds.netdvanko@tds.net

We make no assurances or guarantees asWe make no assurances or guarantees as to the information contained herein to the information contained herein or the outcome for your property. or the outcome for your property.