Who wants to be house poor and broke every month?
Below is a list of the 10 most common reason homeowners decided to short sell in the last six months. If you know any homeowner who is struggling financially with their mortgage, encourage them to contact a local real estate expert who can advise them on the benefits of a short sale.
• 100 percent mortgage debt forgiveness expires Dec. 31.
• HAFA short sale where banks are offering seller incentives.
• Avoid foreclosure.
• Get rid of stress.
• Medical hardship.
• Job transfer/relocation.
• Own too many homes, must get rid of rentals to keep their primary homes.
We all know homeowners who short sold their homes in one or more of the above categories. We know where they are now: happier and financially healthier. These former homeowners are rebuilding their lives. Below are some frequently asked questions at a listing appointment.
Q: How long does it take my bank to foreclose?
A: Your bank can foreclose in just seven months. When you are four months behind on payments, your bank will file a Notice of Default. Three months after that, your bank can foreclose.
Q: Will short sale prevent my bank from foreclosing?
A: No. Banks will foreclose if we do not work together to produce an offer. We will need to work together to show your house to buyers. We will need to submit a fair market value offer to the bank.
Q: Will I need to move out immediately when we receive an offer?
A: No. Once we receive a short sale offer, the offer will be submitted to the bank along with other short sale documents as required. There are other forms that will be required by the bank from time to time also. The short sale review process can take an average of one to four months. If the homeowner has more than one bank it could take longer.
If the buyer cancels due to job layoff or any other reasons, the homeowner will need to start over with the waiting period for the bank to approve a short sale.
Q: How much time does a homeowner have to move out?
A: If a homeowner has many restrictions of where to live, schools that the children needs to attend; it is best that they start looking right away. A good rental in a great area, in great condition and is priced right. Everyone and their uncles are eying for the same great rental. Take it if it fits your need or someone else will.
Q: Why does the short sale takes so long?
A: Short sale is a long process. Mainly because every bank has their own set of procedures. Once an offer is received, a processor will review the documents. Once the processor is done with the review process, the file is passed onto a negotiator who will order the appraisal. Once the appraisal report is back at your bank, the negotiator will review the appraisal value against the offer received. The negotiator may ask more questions of the homeowner, and require more forms to be signed and notarized. The file will then be passed to the investor or mortgage insurance company. The entire process takes an average of three to five months — longer if there are different banks involved.
Full mortgage debt forgiveness expires at the end of this year. Most banks are issuing short sale approval letters that will release homeowners from the deficiency. Most banks are throwing in monetary incentives to help sellers move out. Homeowners who have been thinking about a short sale, now is the time to meet with a local real estate expert who can complete the short sale before Dec. 31.
Annie Christian is a real estate broker and owner of The Annie Christian Real Estate Group. She helps with everything from buying and selling to foreclosure and short sale. To submit a question, call 351-5117. Her website is www.anniechristian.com.