There are many ways homeowners can lose a home, but signing away ownership from foreclosure or bankruptcy can strip an owner of dignity and their nest egg.
The option of a "short sale" or "discounted payoffs" may make more sense for the homeowner; however, there are some issues relating to these kinds of real estate transactions.
The first issue, other than the Mortgage Forgiveness Debt Relief Act of 2007, the home owner should be aware the I.R.S. could consider such an act of debt forgiveness as income.
There are no guarantees that a lender who accepts a "short sale" will not legally pursue a borrower for the difference between the amount owed and the amount paid. In a few states, the amount is known as a deficiency.
The second issue is, even if the property does qualify, not all lenders will agree to do a short sale or discounted payoffs.
So when going though the varying requirements remember the following:
When calling the lender do not speak with the "real estate short sale" or "work out" department(s); rather, get the supervisor's name, the name of the individual capable of making a decision.
You will receive better cooperation if you prepare a "Letter of Authorization" to the lender (giving the lender permission to speak with third parties).
The letter should include the following:
- Property Owners Name
- Property Address
- Loan Reference Number
- The Date
- Agent's Name
- Agent's Contact Info
Some of the other documents needed to have a successful short sale are:
•Preliminary Net Sheet
•Proof of Income and Assets
•Copies of Bank Statements
•Comparative Market Analysis
•Purchase Agreement & Listing Agreement
Often home seller are told to get an experienced listing agent that has handled a short sale; however, no matter the experience level, if you convey confidence with what is involved, and have the above, most individuals will have the confidence in you and your abilities.