Understanding Short Sales and Foreclosure
Sellers: Are you upside down and in hardship? need to sell your property?
Let us to handle the situation. Call us for a free consultation at (954) 559-3675 or send us an email
Some very important facts
· Is when the property worth less than the amount owed to the Bank or lender.
· Seller decides price for listing based on a brokers price opinion.
· Seller must get a contract to the bank before 90 days of missing payments. Usually at 90 days banks files a Notice of Default ( NOD) and court starts the foreclosure process. At this moment is not short sale anymore. Is a property in foreclosure.
· Seller must prove hardship and inability to continue to pay the mortgage
· Seller presents the bank with a contract contingent to the bank’s approval and submit prove of the hardship with financial support documents.
· Loss mitigation departments take care of these processes inside the bank and they require sometime to approve and get the approval from investors linked to that mortgage.
· Bank send letter of approval with conditions to the Seller.
· With the approval, the bank may require that Seller sign a promissory note for the difference between the sales proceeds and the current debt with the bank.
· Usually after the Bank approval, the closing is in around 30 days.
· After 90 days of missing payments (usually), the Bank trustee (lawyer) files a “notice of Default” (NOD) and Bank informs borrower of a period of reinstatement that could go for other 90 days period
· After the reinstatement period, a court order of foreclosure is issued and specifies how the foreclosure must take place and in which terms.
· The Bank issues a “notice of sale” and put that notice in the house and publishes for 3 weeks in a newspaper in the County of the property.
· Usually 30 days after the notice of sale, is the date of the sale at the courthouse and the Bank Trustee set the opening bid which usually includes the amount owed and all fees related to the cost of the foreclosure process. If the bid does not go over of the opening bid, then the property goes to the lender and becomes a REO (Real Estate Owned or Bank Owned)
· The lender may sue to obtain a deficiency judgment in Florida.
· The borrower has the right of redemption all the way until the bid day
· There is a period of time after the sale when the court reviews the sale to ensure a fair price has been paid. This period is usually of 10 days, after which a certificate of sale is filed and title passes.
Buyers: Short sale is a process that requires large amounts of patience and this process is in someway uncertain because it depends on several factors like:
Seller's lenders approval is required and these approvals may take months.
If more than one lender is involved, because the seller has 2 or more liens or mortgages with different lenders, then the process is more complicated and the outcome probably would be a waste of time if the lender second in line do not not authorize the short sale until it gets paid or accpet to be paid certain amount.
Most of the time the asking price is meaningless, because the price established by the seller is unreal according the market and the pay off to the lenders.
In short sale, the buyer must have time and great patience. because due to the quantity of cases being handled by the loss mitigation depts., the process would last months until the lender gives their first response, either approval or counter-offer.
If you intend to make an offer on a short sale, you should ask the following questions before you make an offer: 1) how many lenders are involved 2) the bank already approved a price on the short sale? 3) are there any offers and how many on the property ?
If you have any questions, do not hesitate to contact us:
Theresa Canizales 954-559-3675
2000 NW 150 Avenue, Suite 2000
Pembroke Pines, FL 33028
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