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What is a Foreclosure?
In simple terms: The homwowner has not been making the mortgage payments, and it is the action the financial
institution can use to take the house back. The homeowner borrowed money using the house as collateral with the
agreement that if they could not pay it back, then the lender could take the house.
+ What is a Short Sale?
A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold.
Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure. Financially the lender is
actually ahead after a short sale.
+ What is involved to do a Short Sale?
In order to start negotiating the Short Sale the lender will usually require the homeowner to submit verification that
they are qualified in order to consider the short sale. The information required and documentation necessary is
provided as well as training on the entire process.
+ Will the bank come after the homeowner for the difference?
Short Sales Express will always negotiate with lenders to “Not seek a deficiency judgment” against the homeowner.
+ Is the seller going to get hit with a tax bill or a 1099 if you do a short sale?
Upon successfully closing a short sale, lenders will always report a loss to the IRS and issue a 1099. However, the
Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official, effectively getting rid of the
question "will I be taxed on the Short Sale". Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or
deed in lieu of foreclosure, was potentially taxable income to the borrower.
This was the subject of much media attention and led to many questions and concerns from Sellers wondering
whether or not they were going to get “hit with taxes” on the Short Sale.
The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007
to the end of 2009.
This will effectively put an end to the question from Sellers... will I be taxed on the Short Sale discount. The definitive
answer (at least until the end of 2009) is NO!
For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to:
http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html
+ Will the homeowners credit be affected?
If the homeowner has to short sale their home they’ve most likely missed payments already. That in itself has already
adversely affected their credit. The key here is to stop the devastating affect on your credit that a Foreclosure causes.
A Foreclosure is the most damaging record on your credit report – its even worse than bankruptcy.
By working with Short Sales Express you give yourself a fighting chance of avoiding foreclosure and start towards the
“Rebuilding” process. With our help, your credit will recover quickly if you keep your other lines of credit in good
standing. With Short Sales Express you have an experienced team of professionals that will help you through these
tough times.
+ Is a Short Sale right for me and my situation?
Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a
discounted payoff on a mortgage. If you are faced with a hardship, and are unable to meet your obligation on your
mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.
As you consider the option of pursuing a short sale, remember your lender is looking to limit any potential loss on
your loan. By completing a short sale, your lender has arrived at a solution that is, for them, much better than a costly
foreclosure.
+ What sort of hardship would my lender consider legitimate?
To some extent, that will depend upon the mortgage company considering the short sale request. Generally, as long
as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the short
sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a
hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.
Acceptable Homeowner Hardships
* Death of a borrower
* Illness of a borrower
* Illness of a borrowers family member
* Death of a borrowers family member
* Marital difficulties
* Curtailment of income (reduction of income of a borrower)
* Excessive obligations - same income, including habitual non-payment of debts
* Abandonment of property
* Distant employment transfer
* Neighborhood problem
* Property problem
* Inability to sell property
* Inability to rent property
* Military service
* Temporary loss of income due to layoff
* Health/Medical reasons
* One-time repairs (home, auto, etc.)
* Other Temporary loss of income
Unacceptable Reasons
* Quitting a job
* Leaving a job to stay at home and care for children
* Voluntary reduction in hours worked, reducing pay
* Seasonal layoff from a job
* Quitting a job to go back to school
+ Will the lender approve a Short Sale even if the homeowner is current on their mortgage?
Yes we have successfully negotiated and received an approval on a short sale even when the homeowner was
current on their payments.
+ Why would a mortgage company agree to accept a short sale?
There are actually several reasons why a mortgage company would approve a short sale payoff, including the
following:
• Legal Concerns: Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve
situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an
effort to arrive at a compromise solution.
• Wall Street is Watching Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the
secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning
the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the
lender's ability to sell their loans on the secondary market. A successful short sale gets the loan payoff resolved quickly.
• Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed
until it is repaired and resold. It is expensive to manage real property assets - homes – spread throughout the region,
the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the
administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful short sale
eliminates most of these costs.
• Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all
delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds
cannot be put to work generating new loan fees until the bad loans are resolved. A successful short sale lets the lender
put their money back to work.
+ Can I still short sale my home even if I have 2 loans?
Yes, it doesn’t matter how much you owe. The lender will evaluate what the current market value is and then decide
how much they will accept.
+ Can I still do a short sale even if the property is in very bad condition?
Yes. Lenders are more motivated to do a short sale on a property that needs work than on a property that doesn’t.
Lenders know losses start to skyrocket when they foreclose on a property that needs a lot of repair work. Lenders are
in the business of lending money not property management and home repairs.
+ If I am behind in my payments and can't afford closing costs what can I do?
Lenders are understanding when it comes to this situation and will actually pay the REALTORS® commission and
your closing costs.
In simple terms: The homwowner has not been making the mortgage payments, and it is the action the financial
institution can use to take the house back. The homeowner borrowed money using the house as collateral with the
agreement that if they could not pay it back, then the lender could take the house.
+ What is a Short Sale?
A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold.
Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure. Financially the lender is
actually ahead after a short sale.
+ What is involved to do a Short Sale?
In order to start negotiating the Short Sale the lender will usually require the homeowner to submit verification that
they are qualified in order to consider the short sale. The information required and documentation necessary is
provided as well as training on the entire process.
+ Will the bank come after the homeowner for the difference?
Short Sales Express will always negotiate with lenders to “Not seek a deficiency judgment” against the homeowner.
+ Is the seller going to get hit with a tax bill or a 1099 if you do a short sale?
Upon successfully closing a short sale, lenders will always report a loss to the IRS and issue a 1099. However, the
Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official, effectively getting rid of the
question "will I be taxed on the Short Sale". Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or
deed in lieu of foreclosure, was potentially taxable income to the borrower.
This was the subject of much media attention and led to many questions and concerns from Sellers wondering
whether or not they were going to get “hit with taxes” on the Short Sale.
The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007
to the end of 2009.
This will effectively put an end to the question from Sellers... will I be taxed on the Short Sale discount. The definitive
answer (at least until the end of 2009) is NO!
For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to:
http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html
+ Will the homeowners credit be affected?
If the homeowner has to short sale their home they’ve most likely missed payments already. That in itself has already
adversely affected their credit. The key here is to stop the devastating affect on your credit that a Foreclosure causes.
A Foreclosure is the most damaging record on your credit report – its even worse than bankruptcy.
By working with Short Sales Express you give yourself a fighting chance of avoiding foreclosure and start towards the
“Rebuilding” process. With our help, your credit will recover quickly if you keep your other lines of credit in good
standing. With Short Sales Express you have an experienced team of professionals that will help you through these
tough times.
+ Is a Short Sale right for me and my situation?
Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a
discounted payoff on a mortgage. If you are faced with a hardship, and are unable to meet your obligation on your
mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.
As you consider the option of pursuing a short sale, remember your lender is looking to limit any potential loss on
your loan. By completing a short sale, your lender has arrived at a solution that is, for them, much better than a costly
foreclosure.
+ What sort of hardship would my lender consider legitimate?
To some extent, that will depend upon the mortgage company considering the short sale request. Generally, as long
as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the short
sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a
hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.
Acceptable Homeowner Hardships
* Death of a borrower
* Illness of a borrower
* Illness of a borrowers family member
* Death of a borrowers family member
* Marital difficulties
* Curtailment of income (reduction of income of a borrower)
* Excessive obligations - same income, including habitual non-payment of debts
* Abandonment of property
* Distant employment transfer
* Neighborhood problem
* Property problem
* Inability to sell property
* Inability to rent property
* Military service
* Temporary loss of income due to layoff
* Health/Medical reasons
* One-time repairs (home, auto, etc.)
* Other Temporary loss of income
Unacceptable Reasons
* Quitting a job
* Leaving a job to stay at home and care for children
* Voluntary reduction in hours worked, reducing pay
* Seasonal layoff from a job
* Quitting a job to go back to school
+ Will the lender approve a Short Sale even if the homeowner is current on their mortgage?
Yes we have successfully negotiated and received an approval on a short sale even when the homeowner was
current on their payments.
+ Why would a mortgage company agree to accept a short sale?
There are actually several reasons why a mortgage company would approve a short sale payoff, including the
following:
• Legal Concerns: Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve
situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an
effort to arrive at a compromise solution.
• Wall Street is Watching Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the
secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning
the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the
lender's ability to sell their loans on the secondary market. A successful short sale gets the loan payoff resolved quickly.
• Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed
until it is repaired and resold. It is expensive to manage real property assets - homes – spread throughout the region,
the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the
administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful short sale
eliminates most of these costs.
• Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all
delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds
cannot be put to work generating new loan fees until the bad loans are resolved. A successful short sale lets the lender
put their money back to work.
+ Can I still short sale my home even if I have 2 loans?
Yes, it doesn’t matter how much you owe. The lender will evaluate what the current market value is and then decide
how much they will accept.
+ Can I still do a short sale even if the property is in very bad condition?
Yes. Lenders are more motivated to do a short sale on a property that needs work than on a property that doesn’t.
Lenders know losses start to skyrocket when they foreclose on a property that needs a lot of repair work. Lenders are
in the business of lending money not property management and home repairs.
+ If I am behind in my payments and can't afford closing costs what can I do?
Lenders are understanding when it comes to this situation and will actually pay the REALTORS® commission and
your closing costs.