Do I need to do anything during the process? The lenders require supporting documentation during the process (updated pay stubs, bank statements, etc.) Keep tract of these documents to keep it easy as possible.
What if I have money in the bank? Lenders understand that you need money to live! We will discuss your circumstances in specifics when we meet so your Hardship Letter is geared toward your lender and your personal situation.
How does a short sale help me buy a house again sooner? Homeowners who allow their house to go to foreclosure are not ineligible for a loan for a period of 5 -7 years. With some Lenders, this time frame drops to 2 years with a short sale, allowing you the pride of ownership sooner!
How does a short sale protect my credit? A short sale does damage your credit if you are missing payments, but not to the extent that a foreclosure does. The difference between a short sale and a foreclosure is realized in the future. Do you want to purchase a home again? Do you want to qualify for lower interest lines of credit? If so, a short sale will benefit you the most, because your credit recovery time from a foreclosure is longer than from a short sale.
How does a short sale protect me from liability in the future? In some foreclosure situations, you may be liable for the shortfall from the sale of your property. Your lender could potentially pursue you in the form of a judgment. Also, there are potential issues with future or current employment, security clearances and the ability to gain lower interest credit in the future. In a short sale scenario, when the lender decides to accept a buyers offer they will issue an acceptance letter. Here they will specify the account "settled and no further obligation is due. Consult with Real Estate Attorney for futher detail
What if I just let my house go to foreclosure? Beyond the stigma of a foreclosure and the impact on your neighbors and neighborhood (vacant, blight, sales price, etc.), there could be financial repercussions. You can be responsible for the entire difference of what you owe versus the proceeds of the foreclosure sale. There are additional attorney and court fees, for which you could be responsible. If a judgment is filed for these monies, generally you are required to repay the judgment before new credit will be extended (i.e. cars, credit cards, mortgages, student loans, etc.). Beyond that, most mortgage companies will not be able to extend a mortgage to you for 5-7 years. In a short sale, the outside world sees your sale as a true real estate transaction. No embarrassment, no guilt, no eviction notice on your door.
Can you postpone the foreclosure auction date that's already set? Do we have time? YES!! The clock is ticking, but you do have time. Depending on your lender, an auction can be postponed within mere days of the auction.
What about the 1099c? Does the MFDRA help me? Federal law generally requires that any debt forgiven by a lender be reported and a 1099c issued, which would be treated as income. The question is whether that 1099c you receive is enforceable as income? The Mortgage Debt Relief Act of 2007 protects most homeowners from this 1099c being enforceable. If you fall into the protection of this act, your CPA will file this 1099c appropriately on your taxes for that year, but it will not be seen as income. Please consult your CPA to see if you qualify.
