Tagged: Short sale attorney

Short Sales Should Eventually Become a Shorter Process

If you are a troubled homeowner who was at risk of having their home foreclosed on you may be considering something called a short sale and you may or may not be familiar with the process of a short sale.  If you are considering the process of a short sale for your home as an alternative to foreclosure it may be the best things for you because unlike a foreclosure the debt does not stay with you and it does not go on your credit report that you have been involved in a foreclosure (foreclosures stay on your credit report for 7 years).  But one thing that short sales are known for in the past are for not being short.

Short sales usually never take under three months to close.  As a matter of a fact, short sales on average take six months or longer.  Eventhough the process is worth the wait for the seller and most of the time, as long as the sale goes though, for the buyer and bank also.  But that is not to say that the wait is not a time that many wish would go buy faster.

According to a recent announcement made the Department of Treasury has decided to step in and do something that sellers can’t do when they are involved in a short sale and that is tell the banks to make the short sale process and loan modification process go by faster.  The main thing motivating the Department of Treasury to make the short sale process faster is that currently 80% of all short sales fall through because the process is taking too long and the buyer decides they no longer want the home.

Other people than the seller and purchaser will profit from changes being made to the short sale process in the future also.  Real estate agents have been reluctant to take on short sales because a lot of times it results in the realtor’s commission being decreased in order to allow the sale to go through when the lender says that they would like the house to be sold at a higher price than what the purchaser is willing to offer.  Often times the real estate agent decreases their fee in order to allow the sale to still go through – under the new short sale rules this will no longer be able to happen so realtors may be less reluctant to accept short sale deals.

Under the new short sale rules lending institutions will be required to approve or disapprove a short sale within 10 days and will also have to excuse the individual applying for the short sale from all debt obligations once the short sale is completed.  The Department of Treasurty has advised banks and lending institutions that they have until April 5, 2010 to put the new short sale rules into effect.

 

Buying a Short Sale in New York or New Jersey

In the past couple of years foreclosures have hit a record high and short sales became more popular for homeowners trying to avoid a mortgage default going on their credit report.  Prior to short sales becoming more popular most people did not even know what a short sale is.  A short sale is when a seller can no longer afford their mortgage payments and are risking a mortgage default and the lender agrees to accept funds less than what the mortgage is worth.  Short sales can be a great thing for both the seller and the buyer but it may not be an easy road getting there.

Here is a brief description of the process of a short sale:

  1. Purchaser will want to have an engineers inspection or a home inspection done
  2. Contract of Sale must be signed by the purchaser and the seller
  3. Short sale documents requested by the lender must be submitted by the seller
  4. Lender has to approve the short sale and the price the house is being sold to the buyer for – if the bank does not agree on the price they may request that the sales price be raised or they may not approve the short sale.
  5. Purchaser, as with any other real estate transaction, must get approved for a mortgage if they do not plan on paying cash for the house.
  6. Title must be cleared of any violations and liens.
  7. Closing of title must take place at which time the deed is signed over to the purchaser.

Short sales are great for the seller because they do not have to have a foreclosure listed on their credit report; they are great for the lender because it allows them to not lose as much money on the loan as they would if the house was to be foreclosed on; and they are very attractive to the prospective purchaser because they sell for less than a regular sale would be listed for but they have to opportunity to treat the process as more of a home purchase rather than a foreclosure purchase.  Although this may sound appealing to the potential homebuyer, and may turn out to be a great and well worth experience, there are a few things that the buyer should be aware of regarding the short sale process such as the length of time it may take to get the short sale approved, the risk of putting money out for legal fees, appraisal fees, mortgage application fees and the cost of an engineers inspection report.

A recent announcement by the Treasury Department said that they are looking to approve a widened incentive program for short sales that would entice lenders to be more likely to consider the approval of a short sale instead of allowing the property to be foreclosed on.  If approved, the program, which is part of the Obama Administrations Home Affordable Modification Program, would offer $1,000 to the lender for going through with the short sale, up to $1,000 if there is a second lien holder and would offer the borrow $1,500 towards closing costs.

Here are a few things you may want to consider before purchasing a short sale in New York or New Jersey:

  • Hire an experienced real estate agent.  Hiring an experienced real estate broker for your purchase will help
  • Check public records. You can check the public records for the property to see if there was a foreclosure notice filed yet and to see how many loans the seller has open.
  • Be aware and open minded. If you decide that you are willing to take the chance associated with a short sale purchase be aware that the seller is awaiting bank approval keep and open mind to the fact that the seller may not end up getting approved for the short sale and if they do you could possibly be asked to pay an additional amount of money for the purchase price.
  • Be sure to have a home inspection done. When you are purchasing a short sale you are purchasing the home as is so it is important to have a home inspection (engineers inspection) done to determine if there are any major property defects in the home.
  • Hire a knowledgeable and experienced New Jersey or New York real estate attorney.  Hiring a knowledgeable and experienced real estate attorney is a critical asset to your home buying process, especially if you are purchasing a short sale.  Whether you are purchasing a short sale in Staten Island, Brooklyn, Manhattan, the Bronx, Queens, New York or New Jersey you will want to make sure you select a lawyer who has experience in short sales.