|
On today’s docket:
Short Sale: What Is It and Who Qualifies?
A short sale occurs when the bank accepts a payoff for less than the outstanding mortgage balance on the subject property. Essentially, the bank is shorted the funds due it. For example, you have a $300K mortgage on the property, but the home may be worth $200K in the current real estate market. The bank will accept the $200K payment in lieu of the property being foreclosed. Our goal in executing a short sale is to position the borrower to walk away from the property without owing any of the deficiency. However, the bank may ask for a cash contribution at closing or the signing of a no interest soft note for a portion of the deficiency. Banks may also issue a 1099 to the individual or seek a full deficiency, which is has a higher probability if there is a second mortgage company.
Anyone who is facing a hardship may qualify for a short sale. Hardships include, but are not limited to:
- Loss of job
- Health issues
- Property value is less than the mortgage
- Tenants aren’t paying and you can no longer afford the mortgage payment
- Decrease in salary
- Interest rate adjusted and you can no longer afford the mortgage payment
- Bottom line, you simply cannot afford the property
Please note, it is a misconception that one has to be late on one’s mortgage to qualify for a short sale or that one has to be completely insolvent. We have successfully executed short sales for clients who were current with their mortgage and others with more than a million dollars in assets. Many individuals are candidates for short sale, but due to not being informed, they are not taking advantage of all options available to them.
Just as important as the hardship aspect is whether the bank will accept the offer presented by the prospective buyer. The bank will approve the sale typically based upon how much they will receive from the sale compared to how much they will receive if the property is foreclosed. The bank will choose whichever is greater. With this, it is important to have someone with experience negotiate the short sale. We have been executing short sales since 2005 and have successfully executed a myriad of them. If you have questions about a possible short sale for your condo or virtually any other Chicago real estate, feel welcome to contact us at 773-654-2404 for a free consultation.
By Keith Fenceroy, JD/MBA
Legal Counsel
Nexus Foreclosure Solutions, LLC
Chicago, IL 60657
Phone: 773-209-9515
Fax: 773-345-0410
www.nexusforeclosure.com
keith@nexusforeclosure.com
The preceding article is provided as a complimentary service to OwnACondo.com for general informational purposes only. It is not intended to provide a comprehensive guide to the subject discussed. The descriptions, terms and definitions contained within are solely the responsibility of the author. Contributors to this regular feature include various Chicago-area attorneys. No legal suggestions or guidance are intended, nor should they be implied. Be sure to contact a legal professional of your choice for more information and/or to discuss details of your specific situation.
|