A lender is not going to agree to a short sale unless the seller has no equity and is unable to repay the difference between your sales price and the existing loans. Sellers need to provide a hardship letter to the lender. Sellers may also owe taxes on the amount of debt that is forgiven.
There are an increasing number of short sales in our market. Many of these homes are attractively priced and the sellers are motivated to avoid foreclosure. Buyers should be aware that this can be a lengthy process which requires a lot of patience and may not end in success. There is no guarantee that the bank will accept an offer, even if it is at or above list price.
Hire an Agent with Short Sale Experience
It is critical that you are represented by your own agent in buying any property but particularly in buying a short sale or foreclosure. You need an experienced short sale agent. Your agent can find out who is on title, whether a foreclosure notice has been filed and how much is owed to the lender(s). This is important because it will help you to determine how much to offer. Keep in mind that the contracts you ultimately sign and what you are asked to agree to in terms of time frames for inspections and contingency removal may be different than in a â€normalâ€ transaction. It is important that your agent be conversant in the contracts and addendums and in the process of negotiating a short sale purchase.
If there are two loans, it may be more challenging to get an offer accepted. The first mortgage lender's position is protected by the second lender, unless the second lender does not want to foreclose. The first will need to give something to the second to gain its cooperation or you will not be able to get your offer accepted...
An agent with experience in short sales will help to expedite your transaction and protect your interests. You don't want to miss any important detail due to inexperience or find out your transaction is not going to close on time because no one has followed up in a timely manner. Worse you do not want to find that you have â€œpassivelyâ€ removed contingencies you did not want to remove because your agent was not watching the calendar and expediting inspections or the appraisal.
Submit Documentation & Purchase Offer to Lender
Once the seller has accepted the offer (which will be contingent on the lenderâ€™s approval of the short sale), it will be sent to the lender for approval either by a Short Sale Facilitator or the listing Agent. You do not have an agreement until the lender accepts. Your agent should put together an offer package that includes an Agency disclosure, the offer, a copy of your deposit check, Short Sale Addendum, letter of pre-approval and other documents.
My sale date is scheduled for Feb. 9th per the trustee but Countrywide states that they have no record of a foreclosure sale date in their files. I've submitted two qualified written requests to Countrywide since December requesting information they still have not provided to me such as my interest rate, my monthly payment amount, if I have an escrow account or not, my principle balance, the amount needed to reinstate my loan and the question of the hour - who is holding my original promissory note?? Which is necessary to hold a foreclosure sale in the first place.
Two weeks until the sale date and I have yet to receive any answers, loan mod options or anything that will allow me to stop the foreclosure proceedings without filing BK or hiring an attorney.
Crazy!! I'd love to hear about your story.
Diane Wheatley, Broker
If modification doesn't work, you should consider a Short Sale.
Good Luck and choose your agent carefully! Don't hire a company that charges an up front fee for modification work (our team has never charged anyone a dime for these services up front). You should only pay if & when you get an acceptable modification.
I hope this helps.
Rhonda Burgess, Broker
Realty World Southern Living
Stay on top working with lender they truly dont want your home back. Maybe roll in your lack of payments into backside of note, or request a short sale. Keep contacting lender show you have vested interest in working everything out for all parties favor.
You should be checking with your BK attorney regarding the status of your home in the bankruptcy.
I spent 15 years working as a Insolvency and Restructuring Advisor (financial not legal end) in the Bankruptcy Field. My understanding (this is not meant to be legal advice and you should definitely check with an attorney on this) is that when you file Chapter 7 all your assets and liabilities as of the date of the filing are turned over to the Chapter 7 Trustee to administer. If you have equity in your home, the Chapter 7 Trustee will sell it to satisfy as much of your debt as possible. If you do not have equity in your home the Chapter 7 Trustee will abandon the property from the Bankrupt Estate, at which time the lender can continue the foreclosure procedure or you can work out a loan modification with the lender (assuming they are willing to do that). Your BK attorney may be able to help facilitate the loan modification.
Hopefully this helps you with your decision on how to proceed. Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty