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Short Sale

Prior to the current economic downturn, short sales were rare. The standard response from Lenders had been to foreclose rather than working with homeowners to negotiate a short sale that benefited both parties. An estimated 2.8 Million foreclosure filings occurred in 2009 and another 3.5 Million foreclosure filings are predicted for 2010. Combined, that is approximately 5%, or 1 out of 20, of all homes facing foreclosure.

Short sales offer homeowners a chance to get out from a large debt, and Lenders an opportunity to get more than they would at a foreclosure. With the recent increase in the number of foreclosures, Lenders became aware that foreclosures are not the only option and generally not the best option. Lenders are now willing to negotiate short sales, and have even set up departments for this purpose.

Aware, willing, and able, Lenders still need you to show them that the Lender will make more in a short sale then with a foreclosure. That is where Nichols Zauzig Sandler can help: evaluating your circumstances, gathering the necessary information and presenting this information to Lenders.

What is a Short Sale?
A short sale occurs when a Lender agrees to take less than the amount loaned in order to sell a property. In the past, if a homeowner was no longer able to make payments, a Lender would foreclose. A short sale shows Lenders what they can get more for a home without going through the costs, delays, and uncertainties of the foreclosure process. In return for this higher price and less risk, Lenders generally release the homeowner from any deficiency from the loan.

How Nichols Zauzig Sandler Can Help
Nichols Zauzig Sandler has been negotiating with Banks and Lenders for over twenty years. Nichols Zauzig Sandler knows what information Lenders are looking for and how this information can best be presented.

Contingency Only
If you provide all of the necessary information for a short sale, you will not be charged attorneys fees unless our negotiations result in a sale.

Free Consultation
Call today to set up a free consultation with an attorney to review your specific circumstances.

What Information Will Lenders Require for Short Sale Approval?
For a Lender to approve a short sale, they must be shown two things: 1) that you are not able to continue making mortgage payments; and 2) that the Lender will make more with a short sale than a foreclosure.

1) To show that mortgage payments cannot continue, Lenders require: a “Hardship Statement” and a Financial Statement that documents the hardship.

A Hardship Statement is required to show the inability to continue making mortgage payments. This statement explains what change in circumstances has occurred from when the loan was granted that now prevent you from making payments. Explanations include loss of a job, medical bills, relocation, a separation or divorce, or an increase in interest owed on the mortgage.

A Financial Statement is a snap shot of your current finances. This statement would include current income, expenses, and assets. This snapshot will provide values to the Hardship Statement. The documents required to prove these values should be collected and may be required. Documents include: Bank statements, credit card statements, and pay stubs.

If a Hardship is not shown, then a Lender will not approve a short sale.

2) You must also show a Lender that it will make more with a short sale than a foreclosure. There are additional expenses and risks with a foreclosure that do not exist with a short sale: trustee fees, attorney fees, advertising fees, time, and the uncertainties of the foreclosure process. Before a Lender approves a short sale, the Lender must be shown an estimate on what the property can be sold for, an “Appraisal” or “Current Market Analysis,” and what it will be sold for if the short sale is approved, a “Listing Agreement” and “Purchasing Agreement.”

A.	An Appraisal or Current Market Analysis is required to show the fair market value of your house. An Appraisal can be performed by an appraiser for a fee, or a Current Market Analysis can be obtained from a real estate agent, generally for free.

B.	A Listing Agreement and Purchasing Agreement will show the Lender what they will receive in a short sale before costs. Lenders may also require an estimate on closing costs.

A Lender will then determine if they would benefit from a short sale, weighing the estimated worth of the property, the sale price, and the costs and uncertainty of a foreclosure. Generally, this process will take one to two months. If the short sale is approved, the sale can go forward.