Real Estate Short Sales

The Law Office of Christine Garner, PC is no longer accepting representation of sellers selling their home as short sales effective July 1, 2016.  Short sale lenders continue to make the short sale process more difficult and time consuming while reducing the fees that attorneys can receive.  Therefore, an attorney cannot even cover the costs of processing a short sale if the only fees an attorney receives are the fees authorized by the short sale lender.  I have left information regarding the short sale process merely for educational purposes.

Understanding a Short Sale

When purchasing a home, there are two legal documents that are required: the Note and the Mortgage. The first document, the Note, is the agreement that allows for the creation of the loan that, for most people, makes purchase possible. A simple contract, the Note states that you are responsible for repaying the money the bank loaned you, even if the value of your home becomes less than what you owe.

Once you sign the Note stating you’ll pay back the bank, you’re presented with the second document, the Mortgage, which allows the bank to place a lien against your new home. If you fail to repay your loan, as defined in the terms of your Note, the bank’s security is your Mortgage. It gives the bank permission to take protective actions, such as filing a complaint and gaining judgment for foreclosure. A judgment of foreclosure gives the bank the power to have your home sold in a sheriff sale auction to a third party or to take ownership. With ownership, the bank can put your home on the market in hopes of getting the full amount you still owe and if they don’t get it, the bank can still hold you responsible for the remaining amount.

What is a Short Sale?

When a bank allows the sale of a home that cannot cover both the required closing costs and the amount that is still owed on its mortgage, the sale is known as a short sale and is often times a less painful alternative to a foreclosure. Because the bank has a mortgage, you cannot sell your property without either paying the entire balance owed on the loan or obtaining permission from the bank to release the home’s mortgage in return for less than the amount owed on the Note. There is no law that requires the bank to negotiate or even accept a short sale request because the Note and the Mortgage you signed were private contracts.

Is a Short Sale for Me?

More and more, homeowners find themselves facing financial hardships. Everything from medical bills to divorce can cause a shift in the balance of a family’s income, making it difficult to keep up with monthly or yearly payments. If you’ve found yourself in a similar situation, then a short sale just might be right for you.

It is important, however, to know your options. While a short sale still has consequences, often times they are less severe and cause less damage to your credit for a shorter period of time then proceeding to a foreclosure or bankruptcy. Because there are many things to consider and each individual’s situation is different, it is advised that you speak with an attorney experienced with negotiating short sales so you can determine your best options.  Our attorneys are available for free consultations.  If you have not already received our short sale packet of information, we highly recommend that you contact us so we can e-mail or mail our information to you for your review prior to speaking to an attorney.

Getting Started

Once you have determined that a short sale is the best option for you and your family. the next step in a selling your home through a short sale would be to choose a Realtor, more importantly, a Realtor with experience in short sales.  The Realtor must understand the time frames and requirements involved in a short sale or you could lose valuable time in the marketing and sale of your home. In a worst case scenario, your short sale request could be denied if you are not given appropriate guidance in the requirements of a short sale. If you do not know a Realtor with short sale experience, you can contact our office and we can provide you with a list of experienced short sale Realtors in your area from our database of over 2,500 Realtors who sell real estate through out Northern Illinois.

Marketing Your  Home for Sale

After you have chosen your Realtor, you are ready to list and market your home.  Most lenders will not start the short sale process until you have a contract from a bonafide purchaser unless you qualify a specific short sale program.  For example, if Bank of America services your loan, they have offer a Cooperative Short Sale to some borrowers which allow you start the short sale process before an contract to purchase is received.  If you have an FHA loan you may need to be denied for a loan modification before the short sale approval process can be started.  Once again, this is another reason why we highly recommend that you completely review your situation with an attorney before you begin the sale of your home as a short sale.

Short Sale Packet – Required by ALL Lenders

While you are marketing your home for sale, we highly recommend that you accumulate all of the documentation required by the Lender to consider and approve a short sale.  Our short sale packet, which can be requested through this website, includes a checklist of information that you will need to provide to your lender.    We can not emphasize enough that the best way to speed up the approval of your short sale is to have all of the required information ready to be submitted when you receive a contract from a buyer wishing to purchase your home.  Some lenders have their own specific forms that must be completed so once again it is very helpful if you can call and talk to our office while your home is being marketed for sale so we can provide you with any required lender specific forms.

Our Short Sale Packet

Our detailed short sale packet is provided in two parts:

PART I:  Informational Packet for Short Sales
 I.             ABOUT US– Our Staff|
II.           UNDERSTANDING A SHORT SALE
                A.   WHAT IS A SHORT SALE?
                B.   WHAT IS THE “HAFA  PROGRAM” FOR SHORT SALES?
                C.    WHAT IS THE DIFFERENCE BETWEEN A RELEASE OF
                        LIEN/MORTGAGE AND A RELEASE OF PERSONAL LIABILITY?
                D.    IF THE BANK WILL NOT RELEASE YOU FROM PERSONAL LIABILITY,
WHY SELL THE HOME BY SHORT SALE INSTEAD 
OF FORECLOSURE?
                E.    WHAT CAN THE BANK DO ABOUT THE DEFICIENCY AFTER THE CLOSING?
                F.    WILL THE BANK PURSUE YOU FOR A DEFICIENCY?
III.         THE SHORT SALE APPROVAL PROCESS
IV.         DISCLOSURE REGARDING FRAUDULENT TRANSACTIONS
V.         FORECLOSURE PROCESS
VI.         FEE AGREEMENT FOR ATTORNEY REPRESENTATION

PART II: Forms to Process the Short Sale
I.              FILE CHECKLIST
II.            UNDERSTANDING A SHORT SALE
III.          CLIENT DATA FORM
IV.          DISCLOSURE REGARDING FRAUDULENT TRANSACTIO
V.               FINANCIAL FORM
VI.           FEE AGREEMENT FOR ATTORNEY REPRESENTATION
VII.         AUTHORIZATION TO COMMUNICATE WITH BANK
VIII.        REQUEST FOR  TAX TRANSCRIPTS – FORM 4506T
IX.           BUYER’S TRANSACTION INFORMATION

FORMS FOR THE REALTOR IF NEEDED

 –          SHORT SALE COMMISSION ADDENDUM

–          SHORT SALE ADDENDUM TO PURCHASE AGREEMENT 

–          ADDENDUM “A” TO RESIDENTIAL REAL ESTATE CONTRACT LIEN
RELEASES AND CLOSING COSTS

This service has regrettably been disabled. This message is purely being displayed as to not cause any damage to any website connected to this feature.