SellingNorthernNV

What is a Short Sale?

A Short Sale is when a bank agrees to accept less than what is owed as “payment in full”, in an effort to avoid the foreclosure process. The bank agrees to “write-off” and forgives the remaining portion owed.

Why would a mortgage lender agree to a Short Sale?

- Because real estate and foreclosure laws vary from state to state, the foreclosure process can take a very long time and may tie up both their financial and legal resources as they try to keep up with the different requirements in each state. This lengthy process can be very expensive for the company.

- If a Bank forecloses, the most they can hope for is to sell the property at market value. They would rather just allow a short sale, and avoid having to market and maintain the property themselves.

- Many lenders have to hold cash in reserves to balance the value of the REO properties that are on their books. Many times, this amount can be 3 time the value of the properties themselves. The more money they have to hold in reserve, the less they are allowed to lend.

- Mortgage companies are in the business of lending money, not selling real estate. They are more likely to just cut their losses with a short sale, so that they can go about their normal business.

What are the requirements to begin the short sale process?

- You must be behind on payments
- You must have suffered a hardship (not always just a financial one)
-You must have little or no equity in the home.
- And that’s it.

Will I be responsible to pay taxes on the amount forgiven?

You may be exempt from having to claim the forgiven amount on your taxes under the “Mortgage Forgiveness Debt Relief Act of 2007”.

See Mortgage Debt Relief Act Q&A for more information. You should also speak to a tax professional about your concerns.

What if I don’t want to sell? Should I try a loan modification?

See Four Things You Should Know for more information.

Should you have any questions or need further information,
please don’t hesitate to contact me, (775) 220-1630
Or visit my blog at www.SellingNorthernNV.com

Joshua Talayka
Chase International
Office: 775 850 5900
Toll Free: 877 922 5900
Cell: 775 220 1630
Fax: 775 850 5901
985 Damonte Ranch Pkwy, Ste. 110
Reno, Nevada (NV) 89521

Tags: Default, Loan Modification, mortgage, Mortgage Forgiveness, short sale

This entry was posted by Josh Talayka on Tuesday, June 2nd, 2009 at 11:42 am and is filed under Short Sale & Foreclosures. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.