South Florida Short Sale
South Florida Short Sale – What is it?
A Short Sale is when you sell your home for less than the mortgage balance(s) owed once you’ve received approval from your Lender(s) often in an effort to avoid foreclosure.
What are the Goals of a Short Sale?
- For your Lender(s) to approve the Short Sale
- For your Lender(s) to agree to show the Short Sale as a full settlement of your account relieving you of worrying about payment of the deficiency balance. For example; you owe $450,000 on your mortgage, the Short Sale closes for $350,000 leaving you with a deficiency balance of $100,000. You want them to forgive you of the balance, ideally.
- For you to be relieved of any tax on the deficiency balance. Most borrowers who qualify with a primary residence may be relieved of paying tax on the deficiency through 2012 with the onset of Mortgage Forgiveness Debt Relief Act of 2007 . Please see video further detailing. You may also be considered if you’re Insolvent. Of course, I cannot provide tax or legal advice and you’ll always want to consult with a tax expert and seek legal guidance.
With a Short Sale, homeowner escapes foreclosure and typically will not receive any funds unless you qualify for a Making Home Affordable program or other Lender participating programs.
What will I do for you when you sell home as South Florida Short Sale? Click here to find out about some of the things I will take care of for you
What are some of the reasons that you can be faced with Pre Foreclosure when you are considering to sell home as South Florida Short Sale?
Loss of job or reduced income
Moving out of town to gain employment
Increased property taxes and insurance
Adjustable rate mortgage (ARM) and Zero down loans
Birth of children increasing monthly expenses to an already tight budget
Faced with Divorce and one spouse cannot afford to stay on in home by themselves
Death of family member
Unexpected medical bills from illness
Major home repair bills
Market shift/owe more than home is worth
Obtained a sub-prime loan
Re-finance and pulled out equity
Good things to know about what you can expect when you sell home as South Florida Short Sale; after you’ve completed a Short Sale:
( borrower eligibility for a FHA Mortgage below updated August 2014)
How do you qualify for a new home loan?
Borrowers eligibility for a new FHA Mortgage after Short Sale
- Immediately when they were current on their mortgage and other installment debts at the time of the Short Sale of their previously owned property and the proceeds from the Short Sale was recorded as payment in full.
- Borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement to take advantage of declining market conditions, or to purchase another property at a reduced price
- 3 years from Short Sale date when borrower was late on mortgage payments. Lenders make exceptions to this rule with the FHA Back to Work extenuating circumstances program (see below)
- Under the FHA Back to Work extenuating circumstances program, after 1 year, if you can document:
- that you have fully recovered from extenuating circumstance event in your life such as, severe reduction in income, loss of job or death of primary wage earner
- that your income declined by 20% for at least 6 months from the event by presenting such items as your Federal Tax Returns, W-2’s and employment verification letters.
- Complete a housing counseling prior to closing on your new home purchase
- Review of credit report indicates satisfactory credit prior to the circumstances beyond their control.
When can I buy after a Short Sale or Foreclosure? Fannie Mae guidelines:
- 3 years from Short Sale date for FHA financing
- 4 years from Short Sale date for Conventional financing
- 2 years from Short Sale date for VA financing
- FHA Rule as of 2014, 1 years from Short Sale date or Foreclosure when the buyer experienced an “extenuating circumstances” (see above) whereby their household income fell by 20% or more for a period of at least six months.
- 2 years from Short sale date for Conventional financing when the buyer experienced an “extenuating circumstances” (see above) whereby their household income fell by 20% or more for a period of at least six months.
- 3 years from Foreclosure for FHA financing
- 7 years from Foreclosure for Conventional financing
- 2 years from Foreclosure for VA financing
Borrowers eligibility for a new Freddie Mac Mortgage after Short Sale
- 2 years from Short Sale date with 10% down payment having had extenuating circumstances having had reestablished an acceptable credit reputation otherwise
- 4 years from Short Sale date with 10% down payment
Check the facts.
Don’t believe everything you hear. We knew this from a young age so, why then do we forget this when we’re experiencing stressful situations?
* You must be unemployed to qualify for a Short Sale – false
* You must be behind on your mortgage payments to qualify for a Short Sale – false
* You must live in the property that you want to sell as a Short Sale – false
* As a Seller, I can never receive any money at closing – false. There are government programs and a number of Lender programs that offer cash at closing starting at anywhere from $1000 on up to $3000 with a HAFA program with other programs offering even more.
* You must sell your home close to your mortgage balance – false again
* You must pay back the deficiency balance in a Short Sale – still false. This can be negotiated with Seller’s Lender and many Lenders will not pursue in fact, report as full account settlement.
* You will always have to pay taxes on the deficiency balance in a Short Sale – false again as this depends upon the Sellers situation. As always, it’s recommended that you check with your Tax Advisor who’s knowledgeable in Short Sales tax scenarios.
* Any Real Estate Agent is qualified to list your home as a Short Sale – so false . Many Real Estate Agents with years of experience are well versed in Traditional sales yet when it comes to Short Sales they are lacking in the knowledge and skills to successfully handle a Short Sale and when you’re trying to avoid foreclosure you can not take the risk of an Agent not qualified. I continue to come across Real Estate Agents who are making mistakes when handling a Short Sale which can be devastating to a Distressed Seller. Find an Agent who specializes in Short Sales and has closed Short Sales here in South Florida; ask them.
* It’s too late to sell your home as a Short Sale once you’ve been delivered a NOD (notice of default) with a Foreclosure -false
* You can’t sell your home when you have other Liens on it – false
* Sellers must pay out of pocket for their closing costs such as, Real Estate commissions – false
* You must remain current on your HOA fees – false. Many Lenders will authorize to pay however, it is better to remain current on your HOA as to not be faced with your Lender refusing to pay or paying only a portion of past due balance. I always recommends that Sellers remain current on Homeowners Association dues.
* Most Short Sales do not get approved to close – so so false . I have a 99% approval rating having specialized in Short Sales here in Boca Raton, Coral Springs and nearby South Florida cities for many years now, since 2008, in fact.
If you need to sell your Boca Raton home, Coral Springs Home or other Southeast Florida home as a Short Sale, I would be happy to provide you with a free consultation to see if a Short Sale is right for you. As your South Florida Short Sale Specialist, I am here to help you avoid foreclosure.