Short Sale Attorneys
When your property is worth less than what you owe and you are facing foreclosure in the San Fernando Valley, a short sale can be beneficial in numerous ways.
Applying for a short sale may stop all foreclosure proceedings, including a sales date, if applied for with enough time in advance. During a short sale, negotiations are made with your lender to allow you to sell your home to a third party for less than what you currently owe on the property; your lender will take the loss and write it off. There are certain guidelines that must be followed, like who can and cannot purchase the home. Additionally, there are certain tax implications that may apply to you so it is important to understand the negotiating process.
A short sale also gives you control of when you will have to vacate the home, rather than waiting for an eviction notice to arrive which could give you little to no time to remove your personal belongings. Additionally, in most instances, your lender will provide you with relocation assistance. We have helped many individuals negotiate short sales and some have received up to $10,000 in relocation funds from their lender to help them move to their new home. A short sale is also good alternative for someone who wants to avoid the negative impact a foreclosure can have on their credit. If you want to rent or buy another home in the near future, saving as much as you can of your credit is crucial.
You may be wondering why a lender would ever agree to a short sale. Well, foreclosing on a home can be expensive and a very long process for lenders, one they would like to avoid. Short sales offer the lender an opportunity to get a bad loan off their hands, and write off the debt. Additionally, lenders are often ranked based on how many foreclosures they have so the less they have the better for them. It is important to seek professional help in negotiating short sales. Understanding the guidelines and knowing what to negotiate for, such as tax implications, is important. Unlike the old saying, what you don't know can, and likely will, hurt you.
In negotiating short sales, time is truly of the essence. In some cases, people come to us too late in their foreclosure status to reap the benefits of a short sale, such as receiving relocation assistance. To find out how a short sale may benefit you, contact our San Fernando Valley foreclosure defense attorneys.
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Securing and Negotiating Your Short Sale
If you’ve never gone through a short sale before, you’re going to be unfamiliar with the process. It should go something like this:
- You’ll contact your lender and ask which department handles short sales. Short sales are usually handled by the lender’s loss mitigation department.
- Tell the lender you are planning to do a short sale and request the appropriate documents.
- Fill out the forms the lender gives you.
- Prepare a short sale package or packet, consisting of the documentation the lender requests. This typically includes: two years of W-2 forms, 30 days of payroll stubs, two years’ tax returns, bank statements, medical bills, proof of unemployment, proof of hardship letter, and a comparative market analysis or list of recent comparable home sales in your area.
- Now that you’ve got all the paperwork together, you’ll want to find a short sale broker. This is important because most banks will not approve a short sale if you don’t have an experienced short sale broker to assist you. Brokers take a percentage of the sale price as payment, so ask how much they will charge.
- Now it’s time to submit your short sale package to the lender. Hopefully the lender will approve the short sale and you and your broker will be able to list your home for sale. The approval will include the lowest price the lender will let your house be sold for and the amount of time the lender gives you to sell it before beginning foreclosure proceedings.
- When negotiating your short sale, make sure to ask for a "deficiency waiver." This will prevent your lender from seeking a "deficiency judgment" against you. A deficiency judgment will hold you responsible for the difference between the short sale price and the amount you owe on your mortgage. Remember, even if you receive a deficiency waiver, you may still be on the hook to the IRS for taxes on the amount of money forgiven – it’s considered a gift. This tax liability depends on your circumstances, and an experienced attorney should know how to help.
Keep in mind that lenders are under no obligation to agree to anything, and only will if it benefits them. Also, make sure that you get all the agreements you make with a lender in writing, and document all conversations and correspondence. Getting a lender to agree to a short sale can be a complicated, drawn-out process. To get the results you want it’s important to have the guidance of an experienced short sale attorney. The legal team at Nader & Berneman has been looking out for San Fernando Valley homeowners for over 20 years. Let us put our experience to work on your case by calling (818) 788-5008 for a free consultation.
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