Short sales in Los Angeles County and Short sales in San Bernardino County

If you have looked at anything to do with the Los Angeles County Real Estate Market or San Bernardino Real Estate market you have probably heard of short sales in Los Angeles County California and short sales in San Bernardino County.

With a multitude of medians for communicating information available now days I seem to see a lot of misleading information in the media. My intent is to try and give those interested in buying or selling a short sale a better understanding to the following questions: Who participates in a short sale, What a short sale, How long does a short sale take, and When can I participate in a short sale. I do not believe anyone should ever take the advice from one source in such decisions. I highly recommend that you cross-reference the general scenarios I am providing you with your attorney and your CPA to see if it makes sense with your specific situation. The following is also non-comprehensive, and there will be follow-up posts that will go into further depth and understanding of each section. When completed they will be cross-referenced here.

I can also tell you that patience will be the key to success for anyone interested in participating in a short sale in Los Angeles or San Bernardino County California. The short sale process is going to take time to complete the transaction. This statement is true for both the buyer and seller of a short sale.

WHAT IS A SHORT SALE?

Three things make up a short sale:

1. The current owner owes more than the current market value of the property.
2. The Lender agrees to forgive a portion of the loan to align itself with the market value of that particular property.
3. It is a pre-foreclosure activity.

I want to STRESS the issue and idea of patience required to buy or sell a short sale in Los Angeles County and to buy or sell a short sale in San Bernardino County California.

My Real Estate Pro has had a short sale in West Covina California that was approved in one month, and we’ve had some short sales in California that have taken over 4 months just to make direct contact with the correct person for that lender.

Dealing with a short sale is not a simple task. Banks and lenders were not, and some still are not, set up to handle the sheer magnitude of the requests for short sales that they are receiving. I think we may be beating a dead horse in regards to the general difficulty associated with selling your home as a short sale, but let us now take a moment to look at some specific issues that may make getting your short sale approved more difficult than normal.

Common challenges related to getting a short sale in Los Angeles County or San Bernardino County approved.

Private Mortgage Insurance (PMI)

If you purchased PMI on your loan then the mortgage insurance company will also have to approve the short sale. In this kind instance the mortgage insurance company will be paying the lender the difference in the loss (difference between the net sales price and what you currently owe on the loan). This means the mortgage insurance company will want the property in question to sell for as much as possible, and may hold you the seller liable to pay back some of the difference.

Multiple mortgages or investors

In many instances you will find that the company you are sending your monthly payment to sold your note to a secondary investor, usually before you even made your first payment. In these cases the secondary investors must also approve and sign off on the short sale (part of the long time line process).

If you took out a second mortgage on your house with a different lender than your original mortgage this will complicate the process of getting your short sale approved. The second note holder usually holds out for a fiduciary representation in exchange for accepting the short sale. The first note holder may, but is not obligated to, offer a settlement amount to the second note holder. Inevitably you will need to get the approval of both lenders to successfully close the short sale process with a clean title in tact to give to the buyer.

In some instances the second note holder has accepted the sale provided that the seller agrees to owe a note to them and pay a fee to help mitigate the loss.

Why would a lender want to do a short sale in the San Gabriel Valley in the first place?

The Primary reason a lender would approve a short sale is to mitigate their loss on the transaction. The process of foreclosure is not a cheap endeavor, and if the market price is still falling it is in the lenders best interest to sell as soon as practicable. If the lender feels it is in the best interest of their bottom line to accept a short sale then they will.

I am neither an attorney nor a CPA, and this post is not intended to be or to provide legal advice of any kind. I insist that you talk with your attorney and your tax accountant to determine if a short sale is the best solution for you.

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">PS- If you are planning on listing your home as a short sale in Los Angeles County California or you are planning on listing your home as a short sale in San Bernardino County California make sure you hire an agent who knows how to properly handle short sales and has the experience to get the job done. We are doing successful short sales. Contact us to find out more.

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