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Short Sale vs Foreclosure

Buying Again After a Short Sale

If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years. If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

Buying Again After a Foreclosure

With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years. If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

Affects on Credit After a Short Sale

A short sale is not a derogatory mark on your credit because credit bureaus do not show the word "short sale" on your credit report. It may say "pay as agreed" or "paid as less than agreed," among other categories. Some clients have reported negative FICO score drops from 50 points to 100 points.

Affects on Credit After a Foreclosure

A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years.

Credit Reports After a Short Sale

All lenders report short sales differently and some do not report them to the credit bureaus at all.

Credit Reports After a Foreclosure

If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record.

Wage Garnishment in Recourse States

If the mortgage company must use the judicial foreclosure process, whether you’re the mortgage company for your first mortgage can garnish your wages after the sale of your house depends on whether you live in a state that follows a recourse or non-recourse theory of recovery.

 Recourse States

If you live in a recourse state which Florida is, the first mortgage company has the right to collect against you if the sale of your home is not enough to cover your debt. Remedies might include seizing property, placing additional liens on property you already possess, or garnishing your wages. Each state’s laws provide different remedies for how and when a mortgage company may pursue collection after it completes the foreclosure sale.

Deficiency Judgments After a Short Sale

Judgments are often negotiated between the seller and the short sale bank.

Deficiency Judgments After Foreclosure

Most Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure.

Loan Application Questions After a Short Sale

Loan applications do not ask questions about a short sale. You may report that you sold your home.

Loan Application Questions After a Foreclosure

You are required to answer the question: "Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years." If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.

Length of Time to Move After a Short Sale

If you've had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 1 to 6 months, or longer.

Length of Time to Move After a Foreclosure

Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.

Taxation After a Short Sale

A personal residence is exempt from mortgage debt relief until the end of 2025 on a federal level. Under the current law’s temporary provision, a borrower is excused from paying tax on forgiven home mortgage debt (up to $750,000), so long as the debt was secured by a principal residence and the total amount of the outstanding mortgage did not exceed the home’s original purchase price. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions. Talk to a Tax Lawyer or Tax Accountant.

Taxation After a Foreclosure

Same as with a short sale. Except some lenders immediately send out 1099s, even if the owner is exempt. Talk to a Tax Lawyer or Tax Accountant.

 Good market or bad, we’ve sold homes just like yours. Time after time the sellers and buyers have walked away delighted with the deal. Can you imagine selling your house for less than what is owed on it and walking away not owing a dime? We’re doing it right now, even in these so-called ‘impossible’ times.

ALL WE WANT TO DO IS LISTEN…

 Tell us what you want to see happen to satisfy your current situation. After listening we’ll most likely have a few questions. Even though a lot of others are in the same boat, each individual situation is different. Once you’ve given us a clear picture, we’ll begin marketing your home to hundreds of thousands of buyers from all over the world, every month. Let a Tampa short sale expert sell your home!

NEW HOPE WITH EACH DAY…

 Everyday tens of thousands of people looking for homes will see your listing. They’ll inquire and make offers. Wouldn’t it just be worth it to see some positive action and good things coming your way for a change? Short Sale your Tampa home today!

We have helped many homeowners walk away without paying a dime!!!

                                           What Is A Short Sale?

WHAT IS A SHORT SALE? A “Short Sale” or “negotiated settlement” or “short pay” occurs when a Lender agrees to accept less than the amount owed to payoff a loan as an alternative to foreclosure. If the property is worth less than the amount owed on the loan, then even if the Lender forecloses and takes back the property, they know they are going to take a loss. We can often convince a Lender that they will “do better” if they take less than what is owed now rather than taking the property back by foreclosure and trying to sell it later.

HOW LONG WILL IT TAKE? The Short Sale negotiation process is a lengthy one. It may take several weeks or more likely several months to get an approval. Many Lenders have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a Short Sale approved. So it is important to be patient during this long process.

BUT MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe, maybe not. Just starting a Short Sale will not automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure to let us attempt to negotiate the Short Sale. So, while there are no guarantees, it does not hurt to try.

CAN I STAY IN THE HOUSE? The key word in “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. So you will be moving. This is not a program that can stop a foreclosure and allow you to keep the house indefinitely. It will be easier to sell the house if it is vacant, so you should make plans to move as soon as possible. However you can stay in the home if needed during the short sale process but must be out right before closing.

HOW DO I KNOW THIS WILL WORK? You don’t. We cannot, have not, and will not make any promises to you that this will work. Once you missed a payment, the Lender is in charge and can proceed to foreclosure if they want to. But we know they do not want to and we are very good at presenting alternatives to the Lender that they often want to accept rather than foreclose. We are very good at what we do, but NO PROMISES are being made as to whether or not the Lender will accept a Short Sale – they may or may not.

WILL I GET ANY MONEY FROM THE SALE? NO. A universal requirement of Lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. The Lender is going to take a loss on your loan – they are not going to let you get any money.

WHAT HAPPENS IF THIS DOESN’T WORK? Your house will likely go to foreclosure. A Short Sale is something we try after you have exhausted your other options.

WHAT IS A “RELEASE”? A Lender may offer to “release” its security interest against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid a foreclosure. Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists. You are still liable for the note – in other words – you still owe the money. Reality: It is not likely that the Lender will pursue the deficiency unless you have other significant assets, and if you don’t try a Short Sale and the property goes to foreclosure, you are going to have a deficiency anyway.

WHAT IS A “SATISFACTION”? A Lender may agree to accept less than it is owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owe. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact that the Lender is making money you owe disappear. Sometimes our negotiations are successful in obtaining a satisfaction. Sometimes all we can get is a release.

WILL THERE BE TAX CONSEQUENCES? The Mortgage Forgiveness Debt Relief Act of 2007 which expires end of 2025 also maybe extended provides the discharge of indebtedness up to $750,000 is not considered taxable income from Short Sales of a Seller’s purchase money mortgage on his or her primary residence of at least 2 years. As always, questions regarding your individual tax situation should be directed to your tax advisor or tax lawyer.

WHAT IF I FILED BANKRUPTCY? Since a bankruptcy prevents debt collection activity, and foreclosure is a collection activity, and a Short Sale is an alternative to foreclosure, lenders should not discuss a Short Sale if the property is involved in an active bankruptcy. Therefore, if you have filed a Bankruptcy, we will not be able to negotiate a Short Sale until either: the Bankruptcy is discharged or dismissed, the Trustee abandons its interest in the Property, or the Court issues an Order granting relief from the automatic stay and specifically allowing the Short Sale.

HOW CAN I HELP? The Lender will require a review of a financial package that usually includes: two months’ bank statements, two months’ pay stubs, two years’ IRS tax returns and other information. The leading cause of delay and even denial of our offer to the Lender is caused by the Seller failing to deliver these items in a timely manner. This will help us work faster and increase our success.