by Colleen on June 29, 2010
If you want to do a short sale in the Sacramento area, Elizabeth Weintraub is the pro to call! Not only has she written a book on the subject, but every week she helps more and more homeowners avoid foreclosure through the short sale process. In addition to being a high producing Realtor, Elizabeth is a very prolific blogger.
Recently she wrote a blog post entitled “The Number one Short Sale Question“. (For her, the number one question she’s asked is if a home seller should stop making payments.
When talking with sellers in Maple Valley and throughout South King County about helping them Short Sale their house, the number one question I seem to get is “How long is this going to take”?
Sellers who are serious about short selling, are looking to the future….anxious for the time to move on and start over with a clean slate. For many owners, getting the short sale process completed is akin to removing a huge monkey from their backs. I’ve had several owners thank me profusely for helping them through the process.
My answer to their question is almost always the same….”It depends”. There are so many variables with a short sale transaction that there’s one answer which applies to each property. Here are some of the things which affect timing of the short sale process:
- How many liens are against the property (In most cases there is a first and a second mortgage which must be negotiated, but sometimes there are other liens-such as utilities, or judgments which must be worked out as well before title can transfer to a new buyer.
- Who are the lenders on the mortgage(s)? Many lenders have added staff and are getting much better at streamlining these packages. But others are still completely in the dark. WHO your Lender and Investor (not necessarily the same two entities) can make the process move quickly or at a snail’s pace.
- How cooperative will you be in providing me with requested paperwork? Many sellers who begin the process, are tired a few months down the road. When I get close being issued an approval letter, the Negotiator will often request updated financials. Or if I’m hammering a Lender to waive deficiency rights, sometimes I’ll request my client to write a new, updated hardship letter. The longer it takes to receive this information, the longer the process takes.
- How Committed is the Buyer? It’s not unusual for short sales to close with the second, or even third buyer in the transaction. This can interrupt the process, depending on stage of negotiations and lender involved.
- What’s the Experience Level of the Listing Agent? There are so many inexperienced agents in the market right now, attempting short sales when they have never successfully negotiated one in their entire career. On the other hand, there are some slick-willy “mega agents” who approach Short Sales with the Spaghetti Strategy (list as many as we can, throw them in a bunch against “the wall” and see how many stick). These agents are the ones to avoid at all costs if you’re looking to buy a short sale….the process will be beyond frustrating!
I’ve gotten short sales approved in 3 weeks and others in 4 months. Sometimes getting the approval isn’t the longest part of the process..it’s just the major piece in the short sale puzzle.
by Colleen on March 28, 2009
Sometimes when I meet with homeowners who are either behind on payments or about to be, they ask me why they should bother pursuing options other than foreclosure. We’ve all been overwhelmed at times and felt as if it would be easier to just throw our hands up and walk away from it all. But my job is to help my clients get as much information as possible in order to make informed, educated decisions about their financial future.
Here are some answers to the most common question I get from distressed home owners:
Why shouldn’t I just let the bank have the house?
|
Issue
|
Foreclosure
|
Successful Short Sale
|
|
Future Fannie Mae Loan —
Primary Residence (Effective May 21, 2008)
|
A homeowner who loses a home to foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years.
|
A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years.
|
|
Future Fannie Mae Loan — Non
Primary Residence (Effective May 21, 2008)
|
An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.
|
An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years.
|
|
Future Loan with any Mortgage Company
|
On any future 1003 Application (Standard Loan Application), a prospective borrower will have to answer YES to question C, in Section VIII, that asks, “Have you had property foreclosed upon, or given title or deed in lieu thereof?” This will affect all future rates.
|
There is no similar declaration, or question regarding a short sale.
|
|
Credit Score
|
Score may be lowered anywhere from 150 to over 300 points. Typically, this will affect score for over 3 years.
|
Only late payments on mortgages will show, and after sale, mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points, if all other payments are being made. A short sale’s effect can be as brief as 12-18 months.
|
|
Credit History
|
Foreclosure will remain as a public record on a person’s credit history for 10 years or more.
|
A short sale is not reported on a credit history. There is no specific reporting item for “short sale.” The loan is typically reported as “Paid in full, settled.”
|
|
Security Clearances
|
Foreclosure is the most challenging issue against a security clearance, outside of a conviction for a serious misdemeanor or felony. If a client has a foreclosure, and is a police officer, in the military, a government employee, a security officer, or any position that requires a security clearance, in almost all cases, clearance will be revoked and position will be terminated.
|
A short sale, on its own, does not challenge most security clearances.
|
|
Current Employment
|
Employers have the right, and are actively and regularly checking the credit of all employees who are in sensitive positions. A foreclosure, in many cases, is grounds for immediate reassignment or termination.
|
A short sale is not reported on a credit report, and is, therefore, not a challenge to employment.
|
|
Future Employment
|
Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have, and, in most cases, will challenge employment.
|
A short sale is not reported on a credit report, and is, therefore, not a challenge to employment.
|
|
Deficiency Judgment
|
In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment.
|
In some successful short sales, it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner.
|
|
Deficiency Judgment Amount
|
In a foreclosure, the home will have to go through an REO process if it does not sell at auction. In most cases, this will result in a lower sales price, and a longer time to sell in, a declining market. This will result in a higher possible deficiency judgment.
|
In a properly managed short sale, the home is sold at a price that should be close to market value, and, in almost all cases, will be better than an REO sale, resulting in a lower deficiency amount.
|
If you want to do a short sale in the Sacramento area, Elizabeth Weintraub is the pro to call! Not only has she written a book on the subject, but every week she helps more and more homeowners avoid foreclosure through the short sale process. In addition to being a high producing Realtor, Elizabeth is a very prolific blogger.
Colleen Fischesser, Washington State Designated Broker & Owner of RE/MAX Select R.E; Member NWMLS, SKAR, WAR, Voted "Best in Client Satisfaction" Seattle Magazine 2006,2007 & 2008. Representing home Buyers & Sellers for nearly two decades. 
