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Short Sale:
Mark's Experience with Short Sales
The current market can be harsh to those who bought at full price before
conditions softened. If you are facing the necessity of selling a home for less than you owe on the
on mortgage, Mark brings experience in negotiating a short sale.
A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor. The home owner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale.
Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.
A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.
For the home owner, the advantages include avoidance of having a foreclosure on their credit history. Additionally, a short sale is typically faster and less expensive than a foreclosure.
Lenders have a department (typically called a loss mitigation department) which processes potential short sale transactions.
Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located. Lenders have to approve of any buyer's or listing agent's commission in advance, a primary reason for non-brokered short sales with a specialist or facilitator to save on the margin.
Mark has been through this process and has been approved for these transactions.
The Mortgage Forgiveness Debt Relief Act of 2007
When the lender decides to forgive all or a portion of your debt and accept
less, the forgiven amount is considered as an income for the borrower and is
liable to be taxed. However, After the signing of The Mortgage Forgiveness Debt
Relief Act of 2007 by President Bush, amendments have been made to remove such
tax liability and allow the borrower and lender to work freely together and find
a common solution that is beneficial to both the parties.
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