A “short sale” is a situation where the Seller’s net proceeds are insufficient to pay all outstanding mortgages and other amounts secured by a lien against the property at closing.  There are situations, however, where lender's are willing to accept less than it is owed and allow the Seller to sell the home. The bank pays the broker fee's! 

·                  Many lenders would rather attempt to work with a delinquent borrower doing a Short Sale before resorting to the expense and hassle of a foreclosure.

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  When you put the property on the market you need to  make sure that you are working with a qualified real estate agent who has experience. I am a CDPE, Certified Distressed Property Expert. Short Sale's are what I focus on. 

                                      Steps of a Short Sale

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ITEMS NEEDED FOR THE SHORT SALE PACKAGE: (items may vary depending upon the lender): I will gather all this information - and more - to send to the lender/s as the "Short Sale Packet." They are typically over 100 pages. 

• Cover Letter (prepared by Agent)
• Authorization to Release Information ( for your Agent)
• Seller's Financial information - income vs. loss
• Listing contract with correct verbiage (from Agent)
• 2 years w2's 
• 2 months pay stubs 
• 2 months bank statements 
• Hardship letter- only 2 or 3 paragraphs.  Any supporting documents
• Repair Estimate for the property if applicable
• Comparable sales for the property (from your Agent)
• Contract  written correctly and signed by all (from Agent)
• Net Sheet (Agent will prepare)
• First mortgage holder may ask for a payoff amount from the 2nd
• Second mortgage holder may ask for a payoff amount from the 1st
• Some programs ask for an "O&E" ( Agent will provide)
• FHA and VA have their own forms and special requirements as well

The quicker you are able to provide me this information the smoother the transaction will go.

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......I Can Help!

Colorado Springs home sellers facing foreclosure are being helped using little known short sale strategies developed by the CDPE Institute. I have been trained in this specialty and have achieved the CDPE (Certified Distressed Property Expert) designation which uniquely qualifies me to help families in this unfortunate situation.

• There is never a fee to get assistance or information about Making Home Affordable from your lender or a HUD-approved housing counselor.
• Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away!
• Beware of anyone who says they can “save” your home if you sign or transfer over the deed to your house. Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
• Never submit your mortgage payments to anyone other than your mortgage company without their approval.
• Always seek legal counsel and the advice of a qualified Tax specialist to help with your decision.

Is Your Mortgage in trouble....

Foreclosure vs Short Sale.

THE FIRST THING. THE BANK PAYS THE BROKER FEES

What's the difference between a foreclosure and a short sale?  Well, here it is as provided by Distressed Property Institute handout.

ISSUE	FORECLOSURE	SUCCESSFUL SHORT SALE
Future Fannie Mae Loan- Primary Residence (Effective 5/21/08)	A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.	A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.
Future Fannie Mae Loan- Non Primary (Effective 5/21/08)	An investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.	An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.
Future Loan with any Mortgage Company	On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” this will affect future rates.	There is no similar declaration or question regarding a short sale.
Credit Score	Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over3 years.	Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated.  This will lower the score as little as50 points if all other payments are being made.  A short sale’s affect can be a brief as 12 to 18 months.
Credit History	Foreclosure will remain as a public record on a person’s credit history for 10 years or more.	Short sale is not reported on a credit history.  There is no specific reporting item for ‘short sale’.  The loan is typically reported ‘paid in full, settled’.
Security Clearances	Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony.  If a client has a foreclosure and is a police officer, in the military, in the CIA, Security, or any other position that requires a security clearance in almost all cases clearance will be revoked and position will be terminated.	A Short Sale on its own does not challenge most security clearances.
Current Employment	Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions.  A foreclosure in many cases is ground for immediatereassignment or termination.	A short sale is not reported on a credit report and is thereforenot a challenge to employment.
Future Employment	Many employers are requiring credit checks on all job applicants.  A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment.	A short sale is not reported on a credit report and is thereforenot a challenge to employment.
Future Employment	Many employers are requiring credit checks on all job applicants.  A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment.	A short sale is not reported on a credit report and is thereforenot a challenge to employment.
Deficiency Judgment	In 100% of foreclosure (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.	In some successful short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner.
Deficiency Judgment (amount)	In a foreclosure the home will have to go through an REO process if it does not sell at auction.  In most cases this will result in a lower sales price and longer time to sale in a declining market.  This will result in a higher possible deficiency judgment.	In a properly managed short sale the home is sold at a price that should be close to market value and in almost all cases will be better than an REO sale resulting in a lower deficiency.

  One person put it this way.  Both short sale and foreclosure are bad.  However, one's like getting hit by a car and another a train.  If you have a choice, you go with short sale. 

 Always seek legal counsel and the advice of a qualified Tax specialist to help with your decision.