Short Sales, Deed in Lieu and Other Alternatives to Foreclosure
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WHAT IS A SHORT SALE AND AM I A CANDIDATE?
(Consult a real estate attorney before making any decisions on your foreclosure or short sale!)
Please bear in mind that I am not an attorney I am a Real Estate Broker and this in no way should be taken as legal advice. I have several attorneys I work with along with my clients and I would be happy to recommend a qualified short sale attorney in Clearwater to guide you through the process. It is absolutely imperative that there is a qualified and experienced Real Estate Attorney who is versed in short sale and foreclosures and is local to assist you with this process. There are many serious repercussions of a short sale or a foreclosure and you need to seek legal counsel from real estate attorney before making any decision on whether a short sale in the right course of action for you.
So you heard that there were a lot of short sales in Clearwater and St. Petersburg FL and you decided you would like do avoid foreclosure by commencing a short sale? This is the thought process of many home sellers in St Petersburg, Clearwater and the greater Tampa Bay area who are either facing foreclosure or are simply upside down when it comes to the value of that home they purchased a few years ago.
The short sale process:
First the bank typically will not enter a loan into candidacy for short sale until there have been several payments missed on the mortgage. This will typically initiate your loan file being turned over to their foreclosure or short sale department and then the bank will begin the process of deciding what they will consider for short sale candidacy. Just because you don’t like your house anymore or you are disappointed with your purchase is not a good enough reason for the bank to allow a short sale. You must be able to demonstrate a real hardship with back up as to why you can no longer pay the mortgage on your real estate. This is very important as many people are ruled out on this basis alone. A legitimate hardship is the loss of income, divorce, death of one of the signatories on the note or some other significant and legitimate reason why you cannot and will not be able to pay your mortgage. The bank will do their homework and investigate whether you have money in the bank and other streams of income. If the bank discovers a trust, or cash savings they will more than likely decline the short sale or at the very least demand a promissory note or payment plan from the borrower to repay whatever short fall there is on the mortgage.
There are many cases in which you might want to consider a short sale. If you are considering it, the first step should be to consult a qualified real estate attorney with experience in this field. If you are in the St. Petersburg real estate market or even the Clearwater real estate market or the greater Tampa Bay area real estate market and you are considering a short sale on your home please call Bullard Realty at 727-410-2908. We will place you with a qualified Real Estate and short sale attorney and help you through the process from start to finish.
Before you decide to short sale your Tampa Bay or Clearwater real estate, look at the following points to see whether you may qualify for a short sale. If you are not a YES on all three of these points then you might not qualify for a short sale.
1. Has the Home’s Market Value Declined Drastically?
Closed Comparable Sales must substantiate that the home is worth less than the unpaid balance due the bank or lending entity. This unpaid balance may include a prepayment penalty when the mortgage is paid off or closed out.
2. Is the loan in or near default status?
In the past lenders would not consider a short sale if the payments were current. Sometimes though, understanding that other factors contribute to a potential loan default, some lenders are willing to adjust their policies.
3. Is the homeowner having a financial difficulty?
The seller will be asked by the bank to submit a letter of hardship explaining why the seller can’t make the monthly payments.
The following are not hardship cases:
1. Poor purchase decisions. Overspending on other items is not a hardship.
2. I don’t like my neighbors. This will not cut the mustard!
3. A new child. Deciding to have a new or additional child will not qualify.
4. I have decided to rent an apartment. You cannot abandon your obligations to the lender simply because you are changing your lifestyle.
5. I want to buy a different house. The lender will not care that you want more square footage or a pool.
True and good hardship situations are:
1. Loss of Job(s)
3. The Seller Has No Assets
4. Medical emergency / sudden illness
5. Death of one of the homeowners
WHAT IS A DEED IN LIEU AND AM I A CANDIDATE?
Sometimes a bank may offer a real estate mortgage and if the homeowner cannot pay the note they will offer to take the deed in lieu of foreclosure. This means exactly what it says. If you voluntarily give the bank or lender back the keys to your St Petersburg Real Estate or Clearwater home voluntarily they will call it even so to speak. This is an unusual circumstance in todays market because usually the property is worth less than what is owed to the bank and the losses are too significant for the bank to assume so they will usually refuse to accept this type of arrangement. I have seen it offered on only one St Petersburg real estate mortgage and that was only because the property was not worth all that much less than what was owed. The bank can perform some simple calculations and if they find that your property is fairly close in value in the current market to what they are owed on the mortgage they might elect to save the money and expense of foreclosure to simply take a deed in lieu for foreclosure.
As I noted however in the Tampa Bay Real Estate market many of the homes that are a consideration for a deed in lieu of foreclosure would not be accepted as there is too wide of a disparity between the amount owed and the amount the property would sell for.
The time the bank would certainly accept a deed in lieu would be if the homeowner could not meet their payment obligations but the property was worth more than what was owed.
In this situation the bank could take that Clearwater home that they accepted a deed in lieu on and sell it and be comfortable that they would recover the note amount as well as any costs of the sale.
There are some instances in the St Petersburg, Tampa or Clearwater real estate market where your lender might consider a deed in lieu of foreclosure but make sure you consult an attorney at the beginning of your negotiations with the bank. If you need a referral to a Real Estate attorney please call or email us and we would be happy to provide you with a reference. There are several good Clearwater real estate attorneys who specialize in short sales, foreclosure actions and deed in lieu situations you want to be certain you select the best one for the job. A lot of that decision depends on the bank that your note is held by, the amount owed and the location of the real estate you own. If you own property in St Petersburg or Clearwater home is in foreclosure or you cannot make your payments on your Tampa Bay real estate please call us right away.
SHOULD I JUST LET THE BANK FORECLOSE?
There are very few cases where this is a good option. It should only happen after you have exhausted all attempts to save your home through the efforts and advice of your attorney. We frequently come across Clearwater real estate and St Petersburg home owners who have simply walked away from their real estate before the banks foreclosure efforts have even begun. A foreclosure is devastating to your family, your credit and many other facets of your life and should never be the first choice. If you find that you are unable to make your payments on your St Petersburg real estate of Clearwater home that first call should be to your attorney who specializes in foreclosures. This is the first step to getting the right advice and avoiding making a costly mistake that could have devastating financial consequences both long term and short term as well. Don’t take your friends advice on these matters because they often do not know what they are talking about. Call your Real Estate Agent or Bullard Realty and get a referral for a competent and experienced real estate attorney who can help provide the best result for you and your family when you are facing foreclosure. The best case scenario and one that has often come through for our real estate clients is the bank accepting a short sale and forgiving any short fall of the mortgage due versus the amount owed by the seller. Make sure any agreement to forgive the short fall on the mortgage amount is in writing from the bank. If it is not in writing then you probably do not have forgiveness on the debt and the bank might pursue you later when you least expect it. Probably after all the negatives in the market have blown over and you want to purchase or you have purchased you next piece of St Petersburg or Clearwater real estate.That is general the time when not hiring a good St Petersburg Real Estate Attorney can really hurt your chances to get a home of your own.