Orlando Short Sale Expert | Orlando Short Sales, Orlando Short Sale Realtor / Agent

The easiest way to explain a short sale is to describe what happens when a short sale occurs. A short sale takes place anytime a property is sold for less than what is owed on the mortgage and the lenders who own the underlying mortgages accept less than full payoff as a settlement. This has become common in today’s real estate market.

This allows the property to transfer to the buyer even though the lenders did not receive the full amount that they were owed.

Short sales usually take place during the foreclosure process when a buyer is trying to buy a property and the purchase price will not cover the payoff of the mortgages in full. Most often these properties are bought and sold after the foreclosure process has started but before the process is completed through a sheriff’s or trustee’s auction sale. This stage is called the pre-foreclosure stage.

Lenders and mortgage companies have loss mitigation departments whose responsibility is to deal with properties in foreclosure. The main objective of these departments is to find ways to resolve properties in default other than just foreclosing. In other words they’re responsible for mitigating the bank’s losses and keeping them to a minimum. Those options include short sales, deed in lieu, loan modifications and forbearance agreements all of which will be explored in this course.

Foreclosing on a property is a problem for everyone: the lender, the homeowner and the community. Lenders and investors who own mortgages on houses in foreclosure do not want to foreclose and repossess the property. They would prefer the homeowner make the mortgage payments. Mortgage companies profit greatly by lending money and receiving interest payments in return. Many institutional investors also

invest in mortgages to receive the interest payments in return.

Here’s one myth about the companies who service loans. About 80 percent of the mortgages that service companies like Countrywide, Wells Fargo, Option One, Washington Mutual and Homecomings work are owned by some other investor. Those mortgages are not owned by the service company who sends out the mortgage payment coupons and collect the mortgage payments.

Rather, the mortgages are owned by some other “big hitter” like Fannie Mae, Freddie Mac, FHA, VA, a hedge fund or pension fund. The servicer just collects the payments, calculates the numbers and answers customer calls.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden, or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

• Will I owe the bank money after the short sale is accepted?
• If you are able to negotiate a price and buy it for less then I owe, will the bank come after me for the difference?

When the lender or bank accepts a short sale on the property for less than what was owed, then a deficiency exists with the loan. The deficiency is the difference between what the homeowner owed and the amount the property sold for.

For example, Mr. Jones owes $300,000 on her home and the lender accepts a short sale for $200,000. There is a deficiency of $100,000 for which the lender can then sue the homeowner. The key phrase is “can sue.” That is the right of the lender. However, that is a practice that almost never happens but, it is a real concern for the homeowner. In most cases, the homeowner wants nothing else to do with the lender once the property is sold.

If the deficiency judgment is granted, it would appear on the homeowners’ credit report just as any other judgment would appear.

Will they be required to pay the difference? During the short sale process, we will negotiate with the lender to not seek a deficiency judgment against the homeowner.

Some lenders as a matter of policy, will not seek a judgment against the homeowner because they feel they have waived their right by accepting a short sale however, if you can get them to openly acknowledge they will not seek a judgment; the owner will be more than happy.

There is a second issue as it relates to the deficiency and that is the 1099.

The lender will issue a 1099 to the homeowner for the difference. In Mr. Jones case, the lender will issue him a 1099 for $100,000. This will have to be reported as income Mr. Jones had received and thus he will have to pay taxes on the $100,000 as though it was earned income.

Upon successfully closing a short sale, lenders will always report a loss to the IRS and issue a 1099. However, the Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official, effectively getting rid of the question “will I be taxed on the Short Sale”. Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was potentially taxable income to the borrower. This was the subject of much media attention and led to many questions and concerns from Sellers wondering whether or not they were going to get “hit with taxes” on the Short Sale. The new law, however, temporarily waives these taxes for debts forgiven (as high as35%) from the beginning of 2007 to the end of 2009.

This will effectively put an end to the question from Sellers… will I be taxed on the Short Sale discount. The definitive answer (at least until the end of 2009) is NO! For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to: http://www.govtrack.us/congress/bill.xpd?bill=h110-3648 or http://www.whitehouse.gov/news/releases/2007/12/20071220-6.htmlThe bottom line here is that only Acquisition funding can be forgiven by the Mortgage Forgiveness Debt Relief Act of 2007.Foreclosure, Deed in Lieu and Short Sales are all treated the same in regards to taxes. Any cancellation of debt is a taxable event except for any acquisition funding for your primary residence that you’ve lived in for the last 2 years. Everything else is taxable. However, please see you tax advisor if you have a second home or investment property that you are considering a short sale on. You accountant may advise you that you may have a loss on this investment property that would offset any gain. Please seek advise from your tax advisor.

In my dealing with lenders, we have found that they generally will not seek a deficiency judgment because of the hardship. There are a couple of options that the homeowner has as it relates to the deficiency judgment. In Mr. Jone’s case, he could file bankruptcy to address the judgment. Mr. Jones could also short sale the deficiency with the lender at a later date. In other words, offer the lender a lesser amount as “payment in full.”

Here is an important note. The lender, if they issue a 1099 cannot then sue for a deficiency judgment. The lender can only pursue one or the other. In other words, Mary can’t receive both a deficiency judgment and 1099 from the lender.

It is obviously in the best interest of the homeowner to be proactive and deal with the short sale before it becomes a foreclosure. At least there is a chance that we can negotiate away the deficiency before it even becomes an issue.

About the author:

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs. Please give me a call if you have questions about the Orlando and Central Florida real estate market.

Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

Short Sale will in NO Way affect your Credit as much as a Foreclosure will!!

Don’t let the bank force you into foreclosure, a deficiency judgment, wage garnishments, asset liens, and bankruptcy.

Our Service is totally FREE to You — The Bank Will Pay Us!

We operate in Orange, Seminole, Lake, & Osceola Counties

Your credit will recover in as little as 2 years.  This is far better than the 7 to 10 years that most homeowners in your situation will face.

Below is the most common elements of the short sale process.

1) List the home
2) Bank authorization forms signed
3) Send bank authorization to the bank(s)
4) Market the home
5) Follow up with bank(s)
6) Fill out financial form(s)
7) Gather proof of financial information Send BPO, financial form and financial information to bank(s)
9) Find a buyer
10) Negotiate purchase price/terms with buyer
11) Prepare net sheet for bank(s)
12) Send purchase contract, listing agreement, net sheet to bank(s)
13) Follow up with bank and gather other bank requested information
14) Send bank requested information back to bank(s)
15) Finalize short sale with the bank(s)
16) Order payoff letter from bank(s)
17) Close the property

About the author: 

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of real estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

 Jerry LaRose, P.A., ABR, GRI, e-PRO, CLHMS, REALTOR® 407-580-7011

(Copyright © 2008 By Jerry LaRose, P.A. All Rights Reserved.)

The easiest way to explain a short sale is to describe what happens when a short sale occurs. A short sale takes place anytime a property is sold for less than what is owed on the mortgage and the lenders who own the underlying mortgages accept less than full payoff as a settlement. This has become common in today’s real estate market.

This allows the property to transfer to the buyer even though the lenders did not receive the full amount that they were owed.

Short sales usually take place during the foreclosure process when a buyer is trying to buy a property and the purchase price will not cover the payoff of the mortgages in full. Most often these properties are bought and sold after the foreclosure process has started but before the process is completed through a sheriff’s or trustee’s auction sale. This stage is called the pre-foreclosure stage.

Lenders and mortgage companies have loss mitigation departments whose responsibility is to deal with properties in foreclosure. The main objective of these departments is to find ways to resolve properties in default other than just foreclosing. In other words they’re responsible for mitigating the bank’s losses and keeping them to a minimum. Those options include short sales, deed in lieu, loan modifications and forbearance agreements all of which will be explored in this course.

Foreclosing on a property is a problem for everyone: the lender, the homeowner and the community. Lenders and investors who own mortgages on houses in foreclosure do not want to foreclose and repossess the property. They would prefer the homeowner make the mortgage payments. Mortgage companies profit greatly by lending money and receiving interest payments in return. Many institutional investors also

invest in mortgages to receive the interest payments in return.

Here’s one myth about the companies who service loans. About 80 percent of the mortgages that service companies like Countrywide, Wells Fargo, Option One, Washington Mutual and Homecomings work are owned by some other investor. Those mortgages are not owned by the service company who sends out the mortgage payment coupons and collect the mortgage payments.

Rather, the mortgages are owned by some other “big hitter” like Fannie Mae, Freddie Mac, FHA, VA, a hedge fund or pension fund. The servicer just collects the payments, calculates the numbers and answers customer calls.

*************************************************************************************** 

Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden,  or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

What is a Short Sale?

A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold. Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure. Financially the lender is actually ahead after a short sale.

What is a Foreclosure?

In simple terms: The homeowner has not been making the mortgage payments, and it is the action the financial institution can use to take the house back. The homeowner borrowed money using the house as collateral with the agreement that if they could not pay it back, then the lender could take the house.

What is involved to do a Short Sale?

In order to start negotiating the Short Sale the lender will usually require the homeowner to submit verification that they are qualified in order to consider the short sale. The information required and documentation necessary is provided as well as training on the entire process.

Will the bank come after the homeowner for the difference?

I will always negotiate with lenders to “Not seek a deficiency judgment” against the homeowner.

Is the seller going to get hit with a tax bill or a 1099 if you do a short sale?

Upon successfully closing a short sale, lenders will always report a loss to the IRS and issue a 1099. However, the Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official, effectively getting rid of the question “will I be taxed on the Short Sale”. Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was potentially taxable income to the borrower.

This was the subject of much media attention and led to many questions and concerns from Sellers wondering whether or not they were going to get “hit with taxes” on the Short Sale.
The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009.
This will effectively put an end to the question from Sellers… will I be taxed on the Short Sale discount. The definitive answer (at least until the end of 2009) is NO!

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to:
http://www.govtrack.us/congress/bill.xpd?bill=h110-3648 or http://www.whitehouse.gov/news/releases/2007/12/20071220-6.html

Will the homeowners credit be affected?

If the homeowner has to short sale their home they’ve most likely missed payments already. That in itself has already adversely affected their credit. The key here is to stop the devastating affect on your credit that a Foreclosure causes. A Foreclosure is the most damaging record on your credit report – its even worse than bankruptcy.

By working with Jerry LaRose you give yourself a fighting chance of avoiding foreclosure and start towards the “Rebuilding” process. With our help, your credit will recover quickly if you keep your other lines of credit in good standing. With Jerry LaRose you have an experienced team of professionals that will help you through these tough times.

 Is a Short Sale right for me and my situation?

Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship, and are unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.
As you consider the option of pursuing a short sale, remember your lender is looking to limit any potential loss on your loan. By completing a short sale, your lender has arrived at a solution that is, for them, much better than a costly foreclosure.

What sort of hardship would my lender consider legitimate?

To some extent, that will depend upon the mortgage company considering the short sale request. Generally, as long as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the short sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.

Will the lender approve a Short Sale even if the homeowner is current on their mortgage?

Yes we have successfully negotiated and received an approval on a short sale even when the homeowner was current on their payments.

Why would a mortgage company agree to accept a short sale?

There are actually several reasons why a mortgage company would approve a short sale payoff, including the following:

 · Legal Concerns: Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.

· Wall Street is Watching Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender’s ability to sell their loans on the secondary market. A successful short sale gets the loan payoff resolved quickly.

· Asset Management Expenses- If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets – homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful short sale eliminates most of these costs.

• Reserve Requirement- Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful short sale lets the lender put their money back to work.

 Can I still short sale my home even if I have 2 loans?

Yes, it doesn’t matter how much you owe. The lender will evaluate what the current market value is and then decide how much they will accept.

  Can I still do a short sale even if the property is in very bad condition?

Yes. Lenders are more motivated to do a short sale on a property that needs work than on a property that doesn’t. Lenders know losses start to skyrocket when they foreclose on a property that needs a lot of repair work. Lenders are in the business of lending money not property management and home repairs.

If I am behind in my payments and can’t afford closing costs what can I do?

Lenders are understanding when it comes to this situation and will actually pay the REALTORS® commission and your closing costs.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden,  or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales.

A short sale is when the lender will accept less than the full amount due on a mortgage when a property is sold. Usually, the lender will accept the short sale to avoid the time and expense of a foreclosure. Financially the lender is actually ahead after a short sale. If you’re considering a Short Sale on your Orlando Home please feel free to give Jerry LaRose a call to discuss further.

A 2002 study estimated that the entire cost of a foreclosure was $58,759 and took 18 months. Other factors that can influence a bank’s decision include the liability risk it assumes by owning the property after foreclosures, the money tied up during the holding period for a foreclosure and REO resale, additional costs associated with an REO such as attorneys’ fees, and the additional reserves it will need if REOs rise in the bank’s portfolio. (REO’s stands for Bank Owned properties – Real Estate Owned)

If you are upside down in the value of your home and can no longer make your mortgage payment, there is something you can do. It’s called a Short Sale. Previously, there were few options and a majority of home owners would let the bank foreclose.

STOP – Don’t Let the Bank Foreclose!

 Short Sell the Property. Banks would rather short sell the property than foreclose.

Foreclosure can adversely affect your credit for years to come. Typically, Foreclose would stay on your credit report for 7 years and potentially 10 years. On a Short Sale, typically, the loan that was extinguished will show up on your credit report as “Settled Debt” or Settled Debt for less than originally owed”. Now, that is much better than having a Foreclosure on your credit report.

I will List your Home For Sale, Market it as I would a Normal Listing with my fabulous Marketing that puts your home on over 200 websites to find a buyer for your home, negotiate the short sale with the Lender and close the deal so that you may move on with your life.

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Jerry LaRose is an Orlando Area Residential Real Estate Expert, who can assist you with the purchase and/or sale of Real Estate in Orlando, Windermere, Winter Garden Florida or any place in the country. Jerry has created a team of professionals throughout Orlando and the country to ensure that you enjoy a smooth transition to your new area. Please visit www.JerrySellsOrlando.com for your real estate needs.  Please give me a call if you have questions about the Orlando and Central Florida real estate market.

P.S. If you are listing your home as a short sale in Orange County Florida and Orlando, Windermere, Winter Garden,  or Ocoee Florida make sure you hire an agent who knows how to do short sales and has the experience to get the job done. We are doing successful short sale packages. Call us at 407-580-7011 to find out more about Orange County Short Sales and Orlando Area Short Sales. Jerry is your Orlando Short Sale Expert.