Short Sales for Long Beach Homeowners
The real estate market is improving, as prices have increased over last year however many homeowners remain underwater and unable to make their mortgage payments. A short sale maybe a viable option.
Yet protection for Long Beach short sale sellers will end as the expiration of the Mortgage Debt Forgiveness Act occurs on December 31, 2013. The act allows homeowners, who participate in a short sale, to exclude the forgiven debt from taxation.
What does this mean for you?
Short sales for Long Beach Homeowners should be initiated very soon. Short sales, despite the name, can be a lenghty process. In order to qualify for the debt forgiveness the transaction must be closed by December 31, 2013.
How to start the short sale process?
Hire an experienced, educated Realtor who specializes in short sale transactions. These are very complex transactions often involving two or more liens, bankruptcy and negotiations with buyers and lien-holders.
Homeowners will need to gather documentation; W2's and taxes for the last two years, two months of current bank statements, two months of paystubs. A hardship letter and other lien-holder forms will be required to initiate the short sale.
Short sales for Long Beach homeowners will require mutual cooperation. Agents will need access to show the home to potential buyers and the home should be maintained in show condition. Throughout the transaction it is often required by the Lien-holder that the yard be maintained.
Time is of the essence in a short sale and documentation will need to be returned quickly.
What happens after the short sale?
The approval letter from the lien-holder will state how the short sale transaction will be reported to the credit bureaus. It is important to monitor this as sometimes short sales transactions are reported as a foreclosure.
Seller recovery guidelines (the ability to obtain a new mortgage) have recently changed. FHA has shortened the waiting periods allowing short sellers to re-qualify for a purchase loan. With documentation of extenuating circumstances homeowners who participated in a short sale, bankruptcy or foreclosure may re-qualify to purchase after twelve months.
Additional requirements: An economic event precipitated the default. The borrower demonstrates a full recovery.
A short sale for Long Beach homeowners is a complex process but with the debt forgiveness act set to expire now is the time to move forward.
Contact me to discuss your options, as an experienced, educated Realtor I can guide through the process!