· What is a short sale?

A short sale is the sale of a property (your home) for less than what is owed to your mortgage companies, with permission from all lien holders.
In other words, if you owe $150,000 on your home (with the market value being only $120,000) and your bank(s) decide to accept the $120,000 as payment in full, this would be considered a short sale because the bank(s) is/are accepting a short payoff on the loan.

· Why should I attempt a short sale?

A short sale is valuable because it could save you from needing to file a bankruptcy; and it could save you from a foreclosure as well.
If the bank(s) and lien holders agree to a short sale of your home, they could agree to do the sale and release your debt as paid in full. Making sure the payoff letter from the bank(s) is worded correctly is extremely important. This is what I do to insure you are protected.

· Does it make a difference what type of loan I have on the home?

It can, if it is a Freddie Mac or Fannie Mae or HUD, They may have mortgage insurance to help the bank with their losses. In some cases they have been willing to give the seller $1000 to help with moving expenses as long as there are no liens. If there are liens they will allow your $1,000 seller incentive to go to any of the liens. This is what I negotiate with the banks. If it is a conventional loan the negotiating process is the same but the out come could be much different. The Banks take each sale on a case-by-case basis.

· How long do I have to reinstate my loan?

Generally, banks will allow you ninety (90) days from the time you are found in default or from the notice of default to reinstate your loan. But they will generally not reinstate until your loan is brought current. This can be done in a partial payment and by the bank making payment arrangements on the remaining amount or all at once. This is called a work out or a reinstatement and must be worked out and applied for. They will want to see a financial statement showing you have the ability to make their arrangements.

· How long does it take the bank to foreclose on a home?

In Utah, once you are 90 days late the bank files a Notice of Default (which generally happens around 90 days after you have stopped making payments) you have another 90 days to reinstate the loan or the bank will file a notice of trustee sale. This is posted on the door and sent in a certified letter telling you the home will be going to auction on say December 24th at 9:00 AM at the county court house steps. They then will post the sale in the local paper for 3 weeks for public notice. Then on December 24th at 9Am they will sell it to the highest bidder. Most of the time that will be the bank.

· What will doing a short sale cost me?

Most likely, it won't cost you anything. In a short sale situation, the bank will pay the real estate fees and will often take care of some of the outstanding liens on the property (including taxes, ORS, IRS). So in most cases, a short sale is completely free to the seller.

· Who will pay the real-estate fees?

The first mortgage company (the bank foreclosing on the property) generally pays the real estate fees in a short sale situation. Doing a short sale will save the bank anywhere from $10,000 to $40,000. ( information given me from a bank that did a short sale)

· How long will the short sale take?

This is a tough question. The average short sale takes around four to six months to complete. However, I have seen them take as long as a year! It just depends on the situation, how cooperative the banks are, liens on the property, mortgage insurance, and many other factors.

· Can I just get the bank to discount the loan and sell the house back to me?

I have never seen this done but I have seen some banks renegotiate the payments and interest down if it can help. And I have seen the seconds take a settlement to keep from going bankrupt.

· Can I buy my own home back in a short sale?

It can be done and I have done it but the banks will have some major heart burn if they find out. So they look long and hard to make sure this doesn’t happen. It will require an investor willing to help you.

· What are the advantages to doing a short sale?

A short sale done right can save you from Bankruptcy and foreclosure if caught in time. A lot of the times I find people have filed bankruptcy before they find out that they can do a short sale.

· What happens to my credit after a short sale?

That is the $50,000 Question. Because short sale is a relatively new concept, banks have not come together on how they are reporting a short sale. Some report as settled, some as paid in full, some report paid off, some 90 days late, it varies from lender to lender

· How do I know if the realtor knows how to do a short sale?

Many realtors will tell you just about anything to get your business. I have known of realtors that will tell clients that they can easily do a short sale--but who have never done a short sale before.

A good place to start is to simply ask your prospective real estate agent if he or she has ever completed a short sale before.

Ask the agent some simple questions (perhaps some of the questions on this web site) about short sales. If your agent has short sale experience, he or she won't have any trouble answering any of the questions that are listed here in the Short Sale FAQ. If your agent has trouble answering the questions or if he or she says, "I'll get back to you on that", chances are that your agent does not have enough short sale experience to help you.

· Who talks to the banks during the short sale process?

If you have a good real estate agent, then your agent will do all the negotiating with the banks and lien holders. In fact, generally you will have to do very little in the short sale process (if you have a competent realtor).

· What about liens and judgments on my home?

The bank won't do a short sale while there are liens or judgments on the home. These will need to be taken care of before the bank will approve a short sale. This should be the job of your Realtor to work out payoffs with lien holders.

· Should I file bankruptcy?

It will depend on where you are in the foreclosure process. If the trustee sale is at hand Maybe, but most of the time i can save you from bankruptcy. We may have to get your bankruptcy attorney to strip liens with a lien avoidance motion while doing the bankruptcy

· I have never missed a payment. Why am I in foreclosure?

Your loan company could have sold your loan and you weren’t informed. You will need to prove to the bank you have made the payments and they will straighten it out.

· How did I get in this position to owe more than the home is worth?

The banks will always loan more money that the home is worth because they know it’s not going any where and that you won’t want the bank to take it from you. Some times like our market today, the market is dropping and this will cause the home to be worth less than it was when you bought it.

· Why do a short sale instead of just letting the bank foreclose?

What many people don't understand about foreclosures is that they are actually worse than a bankruptcy on a credit record. With a foreclosure on your record, you could have severe difficulty buying another home for as long as seven to ten years! A foreclosure is the "kiss of death" so to speak.

· How bad is a foreclosure on my credit?

A foreclosure is VERY bad! See the answer to the question above.

· What is a Notice of Default (NOD)?

A Notice if Default (NOD) is the notice the bank files around 90 days after you have stopped making your mortgage payments. It is the official notice that they are beginning the foreclosure proceedings. You generally have around 120 days after the NOD is filed before the bank actually forecloses.

· How long will the bank let me go without paying my mortgage before they start foreclosing?

90 days till they file a notice of default, and another 120 days to go to the foreclosure action.

· When the bank starts foreclosing on my home, what are my options?

You have a few options. First, start making mortgage payments again and reinstate the loan. You might be able to get the bank to work things out with you (with their appropriately named Workout Department) and help you get back on your feet again.

Another option is to find a short-sale-experienced real estate agent who can try to work out the details of a short sale with your mortgage company. If you can't reinstate the loan, then this is your smartest option.

Many people believe that filing bankruptcy will solve all their problems when they are in default. Yes, bankruptcy can alleviate the need to continue to pay off your home. However, the bank will still foreclose on your home and the foreclosure will still end up on your record and ruin your credit even if you file for bankruptcy. This is what most people don't realize. When it comes to your mortgage, bankruptcy won't save you from being foreclosed on and having your credit ruined.

Technically, your third option is to do nothing and let the bank foreclose, but this is not recommended as nothing good can come of it.

· What is a reinstatement?

that is when you catch up on your payments and bring it current. you have about 90 days to do this after they have filed the NOD.

· What are HUDs? (HUD-1, estimated HUDs, settlement statements, net sheets, etc.)

These are what the bank looks at to see where all the funds are going so they can make sure that the seller is not getting any funds back at closing and that the real-estate fees are not more than 5-6% and that the buyer is not getting more than the bank has agreed to if the bank is paying any closing costs for the buyer.

· Why does the bank need HUDs?

The HUDs are what tell the bank what there bottom line will be and what they are going to net. Since the Bank is going to be paying the real-estate fees and title insurance and closing costs for the seller they need a net sheet to show them what the expenses are before they will approve the sale.

· Where do I get HUDs?

I will prepare them for you with the help of a title company.

· What is a PR or title report?

This is what tells who owns the home, and if there is any liens or judgments against the home. If there are any restrictive covenants they will be recorded as a lien.

· What is a BPO or CMA?

A BPO is short for broker's price opinion. This is basically an appraisal the bank orders during the short sale negotiation process to determine whether the value of the current offer on your home (after your realtor has been able to generate an offer on the home) is close to the "market" value of the home. A CMA is a comparable market analysis. This is another form of an appraisal a real estate agent might do on your home, comparing it to others in the area to assess the value.

· If I do a short sale, can I get any money back at closing?

Sellers rarely get money back in the closing of a short sale. But I have seen more than once a bank pay what is called a "seller's consideration" for doing the short sale. This can be as much as $1,000. But this is exception rather than the rule.

· Do I have to include the appliances in the sale of the home?

They are personal property and are your discretion

· Do I have to deep clean my home when selling it in a short sale?

The purchase contract states the home will be broom clean and free from personal belongings.

· Can I take the lights or other fixtures before the home is sold in a short sale?

Its best to live buy the golden rule on this one. I most of the time will list the personal property such as the fridge and stove and micro wave as not included. because if some one does get foreclosed on those items probably will not be there when the bank takes possession especially if the seller is still making payments on them.

· Why will the bank do a BPO or appraisal?

Short sales are a numbers game. The bank needs to know what the approximate value of your home is before they can decide if they want to actually go through with the short sale or if it be better off for them to for close. See it really doesn't matter what was owed on the property when everything went to pot. the deciding factor is what is it worth to day or when the bank forecloses and puts it back on the market.

· What can I take from the home when the bank forecloses?

Your personal property, anything that is attached belongs to the home.

· Can the bank come after me for the deficiency?

Yes, unless the short sale is done right. If the bank forecloses they can come after you unless you did bankruptcy.

· Can the bank come after me for the cost to repair damages?

Yes but most of the time they will go after the Insurance and if they get the money, then the insurance industry won’t issue you insurance in the future

· Can the bank get my insurance company to pay for damages to the home?

That is determined in a negotiations in and between the bank and the title company. they will try to decide if it was normal wear and tare or vandalism or malice on the owners part. Vandalism may not be the seller fault and could fall back on the bank.

· What do I do if the bank comes after me for any deficiency?

Negotiate like no other. Try to settle. offer them a cash settlement of $2000 to $5000 and let them know that's about what you would spend to do a Bankruptcy, but you want them to agree that when they get the funds it will show settled or paid in full on your credit, and make them send you the letter in writing first then keep a copy of the letter and the check to sent to the credit burrows, so they can remove any bad credit caused.

· What is a trustee sale or foreclosure auction?

A trustee sale (also called a foreclosure auction) is the final step in foreclosing on a home. The bank turns over the sale of the home to a trustee (attorney), who attempts to sell the home. If there are no bidders at the foreclosure auction, the home is sold back to the foreclosing bank.

· Can I buy my home back at the trustee sale?

Yes any one can be a bidder at the auction as long as you have cash within 24 hours.

· How long do I have to to save my home from the bank foreclosing?

As stated before, once the bank files a notice of default on the property, a typical time-frame to foreclosure is 120 days. But it all depends on the banks involved.

Interwest Realty Brokers is a real estate brokerage not an attorney or legal firm. Based on knowledge and experience the information on these pages is believed to be true and accurate. However, each situation is unique and you may want to consult an attorney and/ or CPA before you make any final decision.