Short Sales

What is a Short Sale?

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan... Read More

Selling your Property and Starting the Short Sale Process

The HENRI FRANK GROUP can begin the process of the short sale with you. We begin with a FREE consultation. Since 2007, even before the "official" Financial Crisis was proclaimed, the HENRI FRANK GROUP was starting to talk with home owners and doing short sale "work out" deals with the banks... Read More

Steps to the "Approved" Short Sale

Although all lenders have varying requirements, they will demand that a borrower submit a wide array of documentation. And the following steps will give you a pretty good idea of what to expect and what the HENRI FRANK GROUP will ask you to follow to a successful short sale... Read More

What is a Short Sale?

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Usually, banks will incur a smaller financial loss than would result from foreclosure or continued non-payment of the mortgage.

Lenders often have Loss Mitigation departments that evaluate potential short sale transactions. The majority banks/lenders have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from mortgage failures that in part triggered the Financial Crisis that began in 2007, they are now more willing to accept short sales than ever before. For "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling, this presents an opportunity for them to avoid foreclosure as a result.

When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales.

If you are considering buying a short sale there could be drawbacks.

Selling your Property and Starting the Short Sale Process

The HENRI FRANK GROUP can begin the process of the short sale with you. We begin with a FREE consultation. Since 2007, even before the "official" Financial Crisis was proclaimed, the HENRI FRANK GROUP was starting to talk with home owners and doing short sale "work out" deals with the banks. Shortly thereafter the term short sale became a common transaction in our Real Estate market. We have been working through the short sale process from the beginning, and the HENRI FRANK GROUP has seen the changes in bank policy as well as government policy in getting a short sale to completion.

First, contact the HENRI FRANK GROUP at 954-604-9999. We will schedule a FREE consultation and tune into your precise circumstances. We will take you through each step. If a short sale is for you, we will provide you with the necessary paperwork to get this process started.

Now you've contacted us, for your added protection, the HENRI FRANK GROUP suggest that all borrowers/sellers who are selling their property through a short sale do the following:

• Obtain legal advice from a competent real estate lawyer and assist in the sales strategy with the HENRI FRANK GROUP. Not every short sale is the same. And every borrower has unique circumstances.
• Call an accountant to discuss short sale tax ramifications

As licensed real estate agents, we are not licensed as a lawyer nor a CPA and cannot advise on the legal and I.R.S. tax consequences of a short sale transaction. There are certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007 regarding I.R.S. regulation and bank regulation regarding debt forgiveness. A lawyer can determine whether your loan qualifies for a deficiency judgment or claim. Knowing these possible consequences, at the short sale strategy meeting, we will include the advice of an attorney and accountant. The HENRI FRANK GROUP has developed relationships with Real Estate attorney's and tax professionals who have the background and experience with all Real Estate transactions and especially with the short sale process.

Steps to the "Approved" Short Sale

Although all lenders have varying requirements, they will demand that a borrower submit a wide array of documentation. And the following steps will give you a pretty good idea of what to expect and what the HENRI FRANK GROUP will ask you to follow to a successful short sale.

You've contacted the HENRI FRANK GROUP at 954-604-9999. We will meet with you and further discuss your options and this process. We walk you through each step. If a short sale is for you, we will provide you with the necessary paperwork to get this process started and done quickly and as easily as possible.

• Call the Lender
  You may need to make a half dozen phone calls before you find the person responsible for handling short sales. Contact the customer service department for the bank/lender. That contact phone number is typically on the front page of your mortgage statement. You do not want to talk to the "real estate short sale" or "work out" department until after you've talked with the customer service department. Each time you contact the bank/lender you want the full name of the person whom you are talking with and you want their supervisor's name and the name of the individual capable of making a decision. You have to be organized through out this process. Be sure to begin a telephone log. Each and every time you speak to the bank/lender document whom you've spoken to, the date and time you spoke to them.
• Submit Letter of Authorization
  Lenders will not disclose any of your personal information or loan information to anyone but you without written authorization to do so. If you are going to be working with the HENRI FRANK GROUP, we will provide you a formatted letter of authorization to submit to the bank/lender. Your file will receive better cooperation if you submit this letter to the bank/lender giving the bank/lender permission to talk with those specific interested parties about your file. The letter will include the following:
• Property Address
• Loan Reference Number
• Your Name
• The Date
• Your Realtors Name & Contact Information
• Your Attorneys Name & Contact Information

These two steps have now started the Short Sale process with your bank/lender.

• Preliminary Net Sheet
  This is an estimated closing statement that shows the sales price you expect to receive and all the costs of sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any. Your closing agent or lawyer should be able to prepare this for you, if you do not know how to calculate any of these fees. If the bottom line shows cash to the seller, you will probably not need a short sale.
• Hardship Letter
  The sadder, the better. This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Lenders are not inhumane and can understand if you lost your job, were hospitalized or a truck ran over your entire family, but lenders are not particularly empathetic to situations involving dishonesty or criminal behavior.
• Proof of Income and Assets
  It is best to be truthful and honest about your financial situation and disclose assets. Lenders will want to know if you have savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value. Lenders are not in the charity business and often require assurance that the debtor cannot pay back any of the debt that it is forgiving.
• Copies of Bank Statements
• If your bank statements reflect unaccountable deposits, large cash withdrawals or an unusual number of checks, it's probably a good idea to explain each of those line items to the lender. In addition, the lender might want you to account for each and every deposit so it can determine whether deposits will continue.
• Comparative Market Analysis

Sometimes markets decline and property values fall. If this is part of the reason that you cannot sell your home for enough to pay off the lender, this fact should be substantiated for the lender through a comparative market analysis (CMA). The HENRI FRANK GROUP will prepare a CMA for you, which will show prices of similar homes in your neighborhood:

• Active on the market
• Pending sales
• Sold Properties from the past six months.

• Purchase Agreement & Listing Agreement

When you reach an agreement to sell with a prospective purchaser, the lender will want a copy of the offer, along with a copy of your listing agreement. Be prepared for the lender to renegotiate commissions and to refuse to pay for certain items such as home protection plans or termite inspections.

We have now set the stage for a successful short sale of your property. It is a process that is not for everyone, but for those borrowers who the short sale is the answer to their situation, it is a great option. You won't know whether or not this is for you until you've consulted with the right professionals. The HENRI FRANK GROUP strongly suggests you begin by first making a telephone call to us. We have assembled a team for legal, financial and real estate professionals to help you. Don't go it alone, we completely understand the emotional side of this situation and are sensitive to our clients who are faced with even having to consider this process.

Now, if everything goes well, the lender will approve your short sale. As part of the negotiation, you might ask that the lender not report adverse credit to the credit reporting agencies, but realize that the lender is under no obligation to accommodate this request. Credit report status is not always negotiable.

It's simple to begin or just get the information you need to determine if this is right for you. If you are behind on your mortgage, if you are finding that each month the mortgage is getting harder to pay or if you know your mortgage is going to adjust and that may cause a financial hardship, make the phone call to the HENRI FRANK GROUP.