Short Sales for Homeowners in California This is a Free Service to ALL Homeowners. No Fees. No Costs Whatsoever. Is a Short Sale Better for Your Situation? Why would a lender accept a Short Sale? A Short Sale is a form of loss mitigation, the lender (investor) is presented with a choice between a smaller loss through a Short Sale or a larger loss through foreclosure, so accepting the Short Sale “mitigates the loss.” The advantage of a Short Sale compared to a foreclosure is that you avoid having a “debt discharged due to foreclosure” on your credit file which can reduce your credit score by over 250 points and keep you from qualifying for a new home loan for up to 5 years. With a Short Sale you can qualify for a new home loan in just 24 months. In fact, some of our clients have qualified for a new home loan in a little over a year from the date the short sale closed. Qualifying for a Short Sale Lenders will also allow a short sale on an investment property. Some examples of hardship include the amount of rent charged does not cover the mortgage payment and related expenses and you cannot afford to pay out-of-pocket to make up the difference. You are unable to rent the property at a price that covers all expenses. You can't afford to fix damages to the property that keeps you from renting it out. Why Walking Away is not a Good Idea Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. Some people feel they can stay in their home longer if they refuse to work with their lender and walk away at the last minute. WE WILL WORK WITH YOU to maximize the amount of time you can stay in your home and still successfully complete a short sale. There are circumstance where homeowners have given up and resigned themselves to a short sale but would prefer to keep their home. We have successfully used the short sale process to “buy time” until the homeowner regains their financial footing and is able to reapply for a loan modification. Benefit of a Short Sale When Buying A New Home Short Sale Foreclosure
Deed-in-Lieu of Foreclosure
Tax Considerations of a Short Sale - Federal The Mortgage Forgiveness Debt Relief Act of 2007 generally allowed taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualified for this relief. This provision applied to debt forgiven in calendar years 2007 through 2016. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion didn’t apply if the discharge was due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition. The amount excluded reduces the taxpayer’s cost basis in the home. The Mortgage Forgiveness Debt Relief Act of 2007 did not apply to short sales on Second Homes or Investment Properties. However there were Exclusions that applied. Consultation with an experienced tax professional to see how the law applies in your circumstance is advisable. For more information see IRS Publication 4681 - Canceled Debts, Foreclosures, Repossessions, and Abandonments. California State Law Regarding Short Sales The law generally prohibits a mortgage lender from collecting a deficiency or obtaining a deficiency judgment for a short sale involving a loan secured by a one-to-four residential unit property. (Cal. Code of Civil Procedure §580e). The law also generally prohibits a lender from requiring the borrower to pay any additional compensation, aside from the proceeds of the sale, in exchange for a short sale approval. The law applies to first trust deeds, second trust deeds, and other junior trust deeds. It applies to purchase money loans, refinance loans, and home equity credit lines secured by one-to-four residential unit properties. For such refinances, the anti-deficiency protection for short sales applies to all types of refinance loans, regardless of whether the borrower refinanced to obtain a lower interest rate only or took cash out to make home improvements, to pay off credit cards, or for any other purpose. It does not apply to other types of security interests in real property, such as, but not limited to, judgment liens, homeowners’ associations (HOA) liens, tax liens, child support liens, mechanics’ liens, attachment liens, or execution liens. The anti-deficiency protection is for short sales involving owner occupied or non-owner occupied properties. Some Exceptions to the anti-deficiency protections for short sales are:
How Do I Get Started? If a Short Sale is the best solution for you, we will immediately begin the process. A Comparative Market Analysis will be ordered and a listing agent will be assigned. A marketing strategy will be developed based on the time frame we have to complete the Short Sale. Short Sales normally take 90 days to complete. Lender approval will take up to 60 days from the time an offer is submitted. Once approved 30-45 days will be given to close escrow. Is There a Fee to Hire Your Company for a Short Sale? What Areas do You Cover? If you are outside of the Los Angeles County Area, we will assign an agent experienced with short sales and an agent that is part of our statewide network of agents we successfully work with on a consistent basis. The real estate agent will be responsible for listing and marketing your property and we are responsible for working with you, your lender or lenders, the title and escrow company, the buyer's agent and the buyer's finance company to successfully complete your Short Sale. Let us be your Advocate. Our philosophy can be summed up in one sentence - “Total commitment to our client's needs and what's best for them.”
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