SELLERS SHORT SALE INFORMATION FORM MICHELE HAS EARNED HER (CDPE)-CERTIFIED DISTRESS PROPERTY EXPERT DESIGNATION AND IS CERTIFIED AS A SHORT SALE AND FORECLSOURES RESOURSE (SFR). If you have a need to sell your Boca Raton, Delray Beach, Boynton Beach or surrounding area home for less money than you owe the bank presently, the following information will be helpful. WhAT IS A SHORT SALE? A short sale occurs when a property sells for a price that is insufficient to payback the loan(s) secured against it (or any other liens against the property, such as delinquent property taxes, Homeowners/Condominium Association Fees, etc.) as well as standard sales closing costs. In such a case, in order to complete the sale, you, as a Seller, must either: (1) come to the closing with sufficient cash from other sources to cover these shortfalls; or, (2) your lender(s) must agree to forgive all or a portion of the amounts you are "short" or make other arrangements for repayment (such as execution of a promissory note). This second alternative is commonly known as a Short Sale. Your lender will generally not allow you to receive any proceeds or otherwise obtain any monetary benefit as part of a Short Sale. WHAT OTHER OPTIONS MAY BE AVAILABLE OTHER THAN A SHORT SALE? Depending upon your financial condition and other factors such as other liens against the property and available interest rates, you may be able to negotiate a modification of your loan(s), refinance, deed the property back to the lender(s) in lieu of foreclosure, or declare bankruptcy in lieu of attempting a Short Sale. Other options may also be available depending upon your individual circumstances and you should consult with a bankruptcy attorney, tax, credit or financial advisors to help you evaluate these options and determine whether any others may exist and be more appropriate for your circumstances. WHAT IS THE PROCESS FOR GETTING A SHORT SALE APPROVED? There is no universal set of rules or regulations that determine whether you are eligible for a Short Sale or whether your lender(s) will approve a Short Sale. Each lender is different and each has established their own criteria, which may or may not be available to you. Some lenders will not communicate with anyone but you or your real estate attorney regarding a possible Short Sale and others may not discuss the possibility of a Short Sale unless you are in default, or until a contract offer is presented. The basic general steps in the Short Sale process after listing the property for sale are: • Proving Financial Hardship: You must typically prove to your lender(s) that you are experiencing financial hardship and will unable to continue making loan payments. In some, but not all cases, you may already be in default of your payment obligations. Most lenders will require you to provide specific information such as a financial affidavit, tax returns, bank statements, and pay stub in order to prove financial hardship. • Determining Property Value: Once you have proven a financial hardship, you must be able to demonstrate that the property is worth less than the total amount owed to your lender and any other lien holders. Frequently, your lender will require a Broker's Price Opinion (BPO) or Comparative Market Analysis (CMA) from a Realtor, and it will also usually order an appraisal of the Property from a licensed appraiser of their choosing. In some cases, you may be responsible for the expense. • Finding a Buyer: A qualified buyer must submit an offer to purchase the property, which is then submitted to the lender for approval. Each lender with a mortgage or lien against the Property must approve of the potential purchase to the extent that their loans will not be paid in full at closing. Many lenders will not even consider a Short Sale, review the Property's value or evaluate your financial hardship until a bona fide offer to purchase is received. • Final Approval: Once your lender acknowledges your inability to continue your payment obligations and the fact that the Property is not worth as much as the loans(s) secured by the Property, our office, must convince the appropriate decisions makers at each lender that it is in their best interest to approve the Short Sale. We will provide your lender(s) with an estimated closing statement (or HUD) to show them the approximate amount that will be available to them in payment. Most lenders have a specific department that handles these requests which is commonly referred to as either the Loss Mitigation, Preforeclosure, or Loan Workout department. HOW WILL I KNOW IF MY LENDER HAS APPROVED A SHORT SALE? In all likelihood your request for a Short Sale will be subject to different levels of approval by your lender. At various times throughout the process, you (or our office) may be told or otherwise get the impression that your lender views your request favorably or believes that it will be approved. However, you should not assume that a Short Sale has received Final Approval unless and until you have written confirmation from the lender setting forth its approval and all of the specific terms of the compromise. Your lender will in all likelihood have the ability to withdraw its approval up until that time. If your Short Sale is approved, the written approval should be provided to our office so that we can prepare the appropriate documents needed for the closing of the transaction. HOW LONG WILL IT TAKE TO GET A SHORT SALE APPROVED? Every Short Sale situation is different, depending on your individual circumstances, the nature of the loan(s) and other liens against your Property, and your lender's criteria and staffing. If your lender will consider a Short Sale prior to the submission of an offer to purchase, the process may take less time because you should be able to provide your lender with all of the required documentation in advance and the lender may order an appraisal of Property sooner. Even if your lender will not consider a Short Sale prior to submission of an offer, you should have all of your financial information (mortgage documents, bank statements, pay stubs, tax returns, etc.) organized immediately available to avoid unnecessary delays. In the current market environment where Short Sale requests are occurring with much great frequency, your lender may not be able to respond to your inquiry or evaluate your request as quickly as you would like. While some lenders are able to review and approve Short Sale requests quicker than others, many lenders take at least 3-4 weeks, if not longer. In addition, it is important to understand that there is no assurance that your lender will approve of your Short Sale request and until you have written confirmation from the lender that they approved, and the specific terms to which they agree, you should not assume they have given approval, regardless of what you may be told verbally. You should begin to consider any and all other options available to you now in the event your request is denied. WHAT SHOULD BE DISCLOSED TO PROSPECTIVE BUYERS AND BROKERS? Because only your lender will have the ability to approve a Short Sale, your Broker will disclose in the Multiple Listing Service (MLS) and other advertising the fact that the sale of the Property and payment of the offered brokerage commissions is subject to lender approval. Any contract that you accept should be an "As Is" contract and should have a provision making the contract contingent on lender approval. If the lender approval provision is not included in the contract, you may be obligated to close the transaction and pay off your loans in full from other sources of funds if you not obtain Short Sale approval. We will provide your Broker with an addendum to the contract regarding a Short Sale. WHAT ARE SOME NEGATIVES THAT MAY BE ASSOCIATED WITH A SHORT SALE? If a Short Sale results in the reduction or "forgiveness" of part of your loan balance, as a condition of approving a Short Sale, some lenders may require you to sign a promissory note for the difference between the total amount you owe and the amount the lender is receiving from the Short Sale (the "Deficiency"). Even if your lender does not require a promissory note and is forgiving the Deficiency, the IRS may treat the amount of the loan being forgiven as imputed or “phantom income” if the property being sold by Short Sale is NOT your primary residence you may be required to pay taxes on that amount. (If the home is your primary residence and the mortgage you signed was for the acquisition of the home, there may not be any income tax consequence.) An exception to this rule is if you can prove that you were "insolvent" - that your debts were bigger than your assets- before your mortgage lender agreed to a short sale of your property. A tax advisor will be able to tell you for sure whether you'd be considered insolvent by IRS standards and also if there will be “phantom income”. Also, even if you are not in foreclosure, a Short Sale may adversely affect your credit rating as it is a reflection of your inability to satisfy this financial obligation. INFORMATION WE NEED FROM YOU: NAMES OF ALL OWNERS: (The first name listed will be our Contact Person) _____________________________________, Contact Person Contact Person’s Social Security No._____________________ Other Owner’s Social security No._____________________ ADDRESS OF THE PROPERTY TO BE SOLD BY SHORT SALE: CONTACT PERSON’S RESIDENCE ADDRESS: Home phone _________________________ Cell phone ___________________________ Work phone __________________________ Fax _________________________________ E-Mail _______________________________ Real Estate Agent name __________________________ Agent’s office phone number ____________________________ Agent’s cell number _______________________________ Are you living in the property? ______ Is the property being rented? _____; if yes, what is the lease end date? __________ Is the property vacant? ______ Please list all known mortgages and Homeowner or Condominium Associations or lien holders and the estimated balance outstanding on each. 1. FIRST MORTGAGE: _______________________________________________________$________________ Lender Name/Address/Phone Number Estimated Balance Loan Number _________________ 2. SECOND MORTGAGE/HOME EQUITY LENDER: ______________________________________________________$_________________ Lender Name/Address/Phone Number Estimated Balance Loan Number _________________ 3. HOMEOWNER/CONDOMINIUM ASSOCIATION FEES: ______________________________________________________$__________________ Name of Association #1/Address/Phone Number Estimated Balance Amount of Payment: $________________, payable _________ (monthly, quarterly, or yearly). Last paid on _______________ (date). ______________________________________________________$__________________ Name of Association #2 /Address/Phone Number Estimated Balance Amount of Payment: $________________, payable _________ (monthly, quarterly, or yearly). Last paid on _______________ (date). 4. DELINQUENT PROPERTYTAXES: Amount Due $_____________, for year(s) ______________. FORECLOSURE: 1. Have you been served with foreclosure papers/lawsuit? Yes__ N0__ If yes, when were you served? __________ 2. Has a foreclosure sale date been set? Yes__ No__ If yes, when is the sale date? _________ YOU WILL NEED TO PROVIDE THE FOLLOWING DOCUMENTS: Mortgage Payment Statement(s) Mortgage Default or non-Payment Letters 2 MONTHS PAY STUBS 2 YEARS TAX RETURNS 2 YEARS W-2 AND 1099 2 MONTHS BANK STATEMNTS FINANCIAL STATEMENT (our office can furnish this form to you) HARDSHIP LETTER (why you can no longer make your payments) You will need to furnish our office with a formal Payment Status Letter (Estoppel Letter) from you homeowner’s or condominium association, at your expense, upon our request. Please check with your Association as to their charges. This information was provided by Kupfer, Kupfer & Skolnick attorneys at law. |