Hello, Mary.

Visit my website at http://www.DoorToDreams.com and in the search bar in the upper right-hand corner, simply enter short sale. You will have access to a great deal of information.

As a Certified Distressed Property Expert (CDPE), nearly 50% of my business is short sale. Feel free to contact me if I can be of further assistance.

Derek Bauer, Associate Broker
Real Estate One

Foreclosure is the worst thing that can happen, when it comes to Credit Score and Credit Rating.

Short Sale or Bankruptcy will of course affect the Credit Rating, but those two choices indicate that you made a diligent effort to work with your Creditors.

Foreclosure is viewed by many Lenders as "a Non-Payer" who walks away from his or her obligations.

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Best wishes to you,
Fred
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Well, they're essentially viewed the same.
The advantage of a short sale is that you are able to somewhat salvage your score by keeping payments on time and then having the settlement.

You won't (currently) be able to re-purchase another home for three years.

You're settling a debt. You're re-paying something for less than you owe. There will be a credit drop and there will be ramifications.

The advantage is that you're not having to bring thousands of dollars to the table.

Again, give me a call to discuss.

How does it affect my credit score, Is it going to be very low like a forclosure?

Mary --

I'm finding most of my short sale listings taking anywhere from 3-5 months to complete from start to finish.

For that reason, I'd definitely recommend you work with an agent locally who knows the process well. If you have questions, look me up and I will help give you info.

Fred gave some good links.
The Debt relief act most notably states:
Normally, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. But the Mortgage Forgiveness Debt Relief Act allows you to exclude certain cancelled debt on your principal residence from income.

Most banks are going to require that you list the home with an agent local to your market and they (agent) along with you and most often a 3rd party negotiator will work together to fill out the required paperwork to complete the sale.

Once you fill out the initial paperwork, those forms (along with a purchase agreement) will go to the lender for consideration.

Due to long processing and on-market times, most lenders will only accept the hardship packet when accompanied with a PA.

As always, begin by calling your lender.
Tell them what you're going to do.
Don't stop paying on your loan.
Call an agent.
Get the home listed.
Get an offer.
Fill out paperwork.
Submit everything.
Wait. Wait. Wait.
Then, you'll get the "thumbs up" or "thumbs down" from the lender and hopefully close after that.

Having one loan is much easier than having two loans. So, if you have questions, give me a call.

:)

Hi Mary
Are you thinking of buying or doing a short sale.
BEFORE DOING A SHORT-SALE:
Realtors® can not give you legal advice, check with a real estate attorney not a regular attorney but a "real estate attorney" and certified personal accountant on tax ramifications.

You should not avoid your lender. Call your lender directly first and see if you can do a loan work out before you decide to short-sale. There are non-profit home counselors, that help disstressed home owners in keeping their home. Please be careful with contacting people that will do loan mods, there are a lot of non-ethical persons out there that will take your money without thinking twice.
Call your lender and hopefully they will help you out.
Keep us posted on your status.

Millions of Americans today owe more to the Lender than their house is worth. The Seller does not have enough equity in the house to pay off the mortgage. In order to get the house sold, the Lender may agree to take a lesser amount than is owed - that is, the Lender is going to "come up short".

For a Short Sale to occur, the Seller is usually several mortgage payments behind. A Buyer is offering a price that is not sufficient to cover the amount owed to the Lender. The Seller asks the Lender to "allow the contract" and take the loss. The Seller will have to provide financial statements and other documentation to prove that they are not able to come up with the shortage.

Not all Lenders will agree to this. It may be more advantageous for a Lender to go ahead and foreclose on the property. The problem gets further complicated when there are second or third mortgages, or other lenders involved.

Buyers and Sellers should be aware that a Short Sale may have serious legal and tax ramifications:

A Buyer that is purchasing a short sale should get Legal Counsel (an Attorney), to ensure that no liens or judgments will "stick" to the property after the sale.


A Seller should meet with a CPA or Tax Professional to discuss the tax consequences. According to the United States Internal Revenue Service, "if you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable". Sellers may wish to familiarize themselves with The Mortgage Forgiveness and Debt Relief Act of 2007.

http://www.irs.gov/individuals/article/0,,id=179414,00.html

A Seller should also have an Attorney review the documents. It is not uncommon for a Lender to "agree" to a Short Sale, but later come after the Seller for the deficiency. (You do not want Bill Collectors harassing you later, for a debt that you thought was cleared.) A Seller may want to get an IRS Form 1099-C from any and all Lenders or Lien Holders.

http://www.irs.gov/pub/irs-pdf/f1099c.pdf

http://www.irs.gov/pub/irs-pdf/i1099ac.pdf


Sellers and Buyers must realize that a Short Sale can be a long and tedious process. The Lender does not become a party to the contract, but they must approve the contract before the sale can go through. The amount of paperwork involved in a Short Sale can be staggering. Lenders may take weeks or even months before responding to submitted documentation.

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Best wishes to you,
Fred
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