RE-PUBLISHED Information on Short-Sale that was taken from previous posting that I did to the website.  Given the current climate, thought that some of you might like to see chronology from a past deal that I had.

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

Just closed on a short-sale on this past tuesday November 19th. 

As I continue to negotiate and work with banks on these there are always lessons to be learned.  Here is a quick chronology from the last deal.

• August 20, 2007 - fielded a call from a seller that was nearing foreclosure with expected foreclosure date for the first Tuesday in October 2007
• August 31, 2007 - wrote up purchase sale agreement for property
• September 10, 2007 - gathered all required documentation from seller for short-sale submittal to bank.  Included in this was hardship statement, bank statements,  authorization to release, purchase sale agreement, financial statement / condition of seller, tax return of seller.
• September 15, 2007 - talked with loss mitigation department representative regarding short-sale offer.  They inquired about missing documents and missing documents were faxed over.
• September 17, 2007 - loss mitigation department sends me over to negotiator for bank
• September 30, 2007 - still in negotiations with bank negotiator and he says that he "might" stop the foreclosure
• October 3, 2007 - bank negotiator stops the foreclosure on the day of the foreclosure (...whoa that was close)
• October 15, 2007 - bank negotiator starts calling me repeatedly (that's a change) telling me he will now accept my offer.
• November 1, 2007 - receive formal written offer from bank that says they are in agreement with my discounted payoff
• November 19, 2007 - property is bought

Moral of this - PERSISTENCE...!!! I made it look easy above.  Total calls made to bank were probably over 100 with over 20 hours on the phone in either waiting or talks.

Let me know if you have any good short sales in process

Additionally - here is a short informative article on the short sale process that I thought everyone might find useful.

Doug Ingram

Short Sales by Paul Sunndin

When housing prices in many parts of the country were booming a couple of years ago, there wasn’t much national attention given to short sales. But with the current subprime debacle and increasing mortgage delinquencies, many people are wondering if the short sale process is a way to avoid foreclosure.

Basically, the definition of the short sale process is when the lender of a property allows the property to be sold for less than the amount due on the mortgage loan.

The obvious benefit to the short sale process is that it allows the seller to avoid the credit report damage associated with a foreclosure. A foreclosure can stay on your credit report for up to 10 years and can take an emotional and financial toll on you and your family.

But the pitfalls of the short sale process should be considered as well. The I.R.S. may consider any debt forgiveness as taxable income, thus resulting in a tax liability. In addition, lenders can often pursue a borrower for the deficiency balance (the difference between the amount owed and the amount paid).

In some cases you may be able to avoid taxation if you can prove you are insolvent. But if insolvency is unsuccessful, and you are faced with a tax liability resulting from the deficiency amount, it may make more financial sense for you to let the lender foreclose.

The Short Sale Process

The short sale process can vary, but it will generally work as follows:

1) The lender is contacted to discuss the possibility of a short sale and to determine the lender’s process for completing the sale.

2) The seller issues a letter authorizing the release of personal information about the loan and the property to the buyer or escrow agency.

3) The lender will review a settlement statement, which will indicate the proposed selling price, remaining loan balances and itemize all expenses, including real estate commissions and other fees and expenses associated with the closing.

4) The seller will complete a "hardship letter," which will detail and explain all financial difficulties. Lenders will usually want to validate the seller’s financial situation by looking at bank statements, investment accounts, along with examining paystubs and other financial records.

5) The lender will then look to the broker to provide a price opinion by examining the condition of the house and the market value of comparable properties.

6) The lender will then want to scrutinize the purchase agreement to determine if all amounts are reasonable and the real estate commission is acceptable.

Because of the documentation required, the short sale process can be lengthy. But if done correctly, it can work well for all parties involved. The lender avoids the uncertainty of the foreclosure process, the seller avoids a foreclosure on his or her credit report (along with potential bankruptcy), and the buyer hopefully got a good deal on a property.

Considering the complexity of the short sale process, you must be educated. If you are considering a short sale, make sure that you discuss your situation with a competent lawyer and accountant. The more educated you are on the process, the easier the transaction will be, and the better the impression you will make on the lender.