In today's unsteady economy, many homeowners experiencing financial difficulty have turned to a short sale as a means of avoiding a foreclosure.

A short sale* is a transaction for the sale and purchase of real property where the purchase price is less than the amount required to pay off the liens on the real property, such as mortgages, judgments, taxes, homeowner or condominium association fees, assessments, as well as closing costs including but not limited to brokerage commissions, realty transfer fee, and attorney's fees.

*Short sales can have serious legal, credit and tax implications. Navigating through these long and often-confusing transactions can be difficult. It is advised that you work with a knowledgeable REALTOR and consult an attorney or tax professional with regard to potential short sales whenever possible.

Facing Foreclosure?

If you are currently a mortgage holder and you are having difficulty making your payments, first consult your lender or loan officer to explore options other than foreclosure, such as forbearance or refinancing. There are loan modification programs and refinancing options being offered through the following organizations:

Fannie Mae 
Freddie Mac
HOPE NOW - (888) 995-HOPE (4673) - a HUD-approved alliance that provides free foreclosure prevention assistance. HOPE for Homeowners program, which allows distressed borrowers to refinance into affordable, government-back mortgages.

Beware of foreclosure recovery scams, or fraudulent companies that target borrowers at risk for losing their home. Read the warning signs to protect yourself from becoming a victim. View trustworthy resources from state and local government agencies aimed at helping you to avoid foreclosure.

Brochures are available from the U.S. Department of the Treasury (Consumer Tips for Avoiding Mortgage Modification Scams and Mortgage Rescue Scams) and the Office of Thrift Supervision (Foreclosure Rescue Scams/How to Avoid Becoming a Victim).

Consider a Short Sale

If you have missed payments on your home, call your mortgage company. If losing your home is in the foreseeable future, consider a short sale. Some lenders may even have a short sale or loss mitigation department.

Short sales may appear on your credit report as "pre-foreclosure in redemption," rather than "debt discharged due to foreclosure." Thus, people who come to an agreement on a short sale with their lender could do far less damage to their credit rating than those who go through a foreclosure. Additionally, a benefit to a short sale is that borrowers will generally face a shorter waiting period before they can obtain another mortgage. Good luck, I am here to help. Give me a call today and I will walk you through the process.

Short Sale Information for Buyers

Due to the recent market correction, buyers can find homes at more affordable prices than at the height of the market. The foreclosure and short sale markets have also become more prevalent. Buyers interested in purchasing a short sale or foreclosed properties are advised to work with a REALTOR who will help in the step-by-step process.

Buyers can consult with a REALTOR to negotiate with a lender on a price to purchase the property. Note: this can be a lengthy process as lenders tend to evaluate the financial proficiency of any and all offers.

Be prepared to provide proof of income and produce financial documentation in the mortgage pre-approval process. Due the subprime mortgage situation of the previous few years, lending standards now require more time and documentation.

If your offer is accepted, there is a good chance the home will be sold "as is," which means there is no negotiating when it comes to the seller/lender and home improvements. It is important to obtain a thorough home inspection to assess the condition of the property.

The U.S. Department of Housing and Urban Development (HUD) offers a program to finance the costs of rehabilitation and improvements made on the home. Rather than obtain separate mortgages to finance the purchase and rehabilitation of a home, the 203 (k) programs offers buyers the opportunity to obtain a single mortgage from a Federal Housing Administration (FHA)-approved lender to finance the purchase and subsequent improvements that may need to be made to occupy the residence