What’s a Short Sale?

What’s a Short Sale?
A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency.

The Short Sale Process
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is “doing the other a favor;” a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than would result from foreclosure or continued non-payment. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO or BOV).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents an opportunity for “under-water” borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.

Whose All Involved in Completing my Short Sale?
Multiple levels of approvals and conditions are very common with short sales. Junior lien-holders – such as second mortgages, HELOC lenders, and HOA (special assessment liens) – may need to approve the short sale. Frequent objectors to short sales include tax lien holders (income, estate or corporate franchise tax – as opposed to real property taxes, which have priority even when unrecorded) and mechanic’s lien holders. It is possible for junior lien holders to prevent the short sale. If the lender required mortgage insurance on the loan, the insurer will likely also be party to negotiations as they may be asked to pay out a claim to offset the lender’s loss in the short sale. The wide array of parties, parameters and processes involved in a short sale makes it a relatively complex and highly specialized type of real estate transaction. Not surprisingly, short sale deals have a high failure rate and often do not close in time to prevent foreclosure when they are not handled by a knowledgeable and experienced professional.[citation needed] The best sources of knowledge and expertise in short sales are short sale negotiators, loss mitigation specialists, and real estate lawyers who specialize in short sale.

Short sale success rates vary from state to state and from bank to bank. Bank of America short sales, as of 2009 are still the longest to be approved and have the highest failure rate. Whereas, Citi and banks like Wells Fargo tend to move faster. Smaller “local” banks tend to have their own rules, but will typically approve the short sale in days, not months.

Your Approval is Required to Complete Short Sale
Short sales are different from foreclosures in that a foreclosure is forced by a lender, whereas both lender and borrower consent to a short sale. However, this consent may change at any time, and negotiations may be ongoing between the lender and borrower even while the short sale is on the market. The borrower may decide to remain and refinance their house, or become obstinate and force foreclosure. The bank may renege as well if they decide to stick with the current borrower, or if they disapprove of the sale price. Any short sale contract includes a contingency where the bank must approve the sale.

Changing consent can present a perilous situation for potential buyers. It can waste considerable time and money for a prospective buyer who anticipated a sale. Typically, deposits with the bank will be refunded but money for paid inspections or other services cannot be.

There are several defenses against this. If the seller has moved out of a property, that is a clue that they have no intention of staying or negotiating further with the bank. “Bank Approved Short Sales” are advertised by real estate advertisements, indicating that a real estate broker has verified the selling bank’s position. This still does not guarantee acceptance, and it often does not take junior lien-holders into account, but it is better than situations where the bank holding the mortgage has only been lightly involved in the borrower’s decision.

Credit Implications & Negative Impact of Completing a Short Sale
Short sales are a type of settlement, and they adversely affect a person’s credit report, though the negative impact may be less than a foreclosure. Although in some cases the effect is the same. Like all entries except for bankruptcy, short sales do not show on a credit report according to the Distressed Property Institute. The credit will restore within 18 months or so. Depending upon other credit information, it is possible to obtain another mortgage 1–3 years after a short sale, or less if the borrower is current at the time of the sale.

While lenders sometimes forgive the remaining loan balance, other lien-holders likely will not. Further, it is possible for a lender to omit updating mortgage balances zero balance after a short sale. However, willfully misrepresenting information on a credit report can constitute libel in some jurisdictions, and lenders may be sued in civil court for engaging in this behavior. 

We Specialize in Short Sales in the Follow DFW Cities:

• Addison Short Sales
• Allen Short Sales
• Arlington Short Sales
• Bedford Short Sales
• Carrollton Short Sales
• Cedar Hill Short Sales
• Celina Short Sales
• Colleyville Short Sales
• Coppell Short Sales
• Copper Canyon Short Sales
• Dallas Short Sales
• Denton Short Sales
• Desoto Short Sales
• Duncanville Short Sales
• Euless Short Sales
• Farmers Branch Short Sales
• Flower Mound Short Sales
• Fort Worth Short Sales
• Frisco Short Sales
• Garland Short Sales
• Grand Prairie Short Sales
• Grapevine Short Sales
• Highland Park Short Sales
• Hurst Short Sales
• Irving Short Sales
• Keller Short Sales
• Lakewood Short Sales
• Lancaster Short Sales
• Las Colinas Short Sales
• Lewisville Short Sales
• Little Elm Short Sales
• Lucas Short Sales
• Mansfield Short Sales
• McKinney Short Sales
• Melissa Short Sales
• Murphy Short Sales
• M Street Short Sales
• North Richland Hills Short Sales
• Parker Short Sales
• Plano Short Sales
• Preston Hollow Short Sales
• Prosper Short Sales
• Richardson Short Sales
• Rowlett Short Sales
• Southlake Short Sales
• The Colony Short Sales
• University Park Short Sales
• Wylie Short Sales

What’s Loan Mod?

Have you fallen behind on your mortgage payments? Or, maybe you haven’t missed a payment but are worried about an upcoming rate adjustment and you’re not sure where to turn. Have you tried to contact your mortgage lender and gotten lost in the automated loop? Did you get lucky enough to speak to someone only to find out they were trying to collect a payment?

At Halo, we understand it is not just an investment, it’s your home. Our professional consultants will provide you the personal attention you deserve. Every situation is different. Let us handle the painstaking process and present the most compelling case possible for you.

The mortgage business can be complex and confusing. For most people it is like learning a new language. With a combined 50+ years of management experience in the mortgage industry, Halo will analyze your financial situation and request from your servicer a modification of your current mortgage. We already speak the language so you don’t have to.

Don’t trust your home to a less experienced company. Let Halo work with you to find the best possible solution for you and your family.

The Halo Loan Modification Process:

What’s Debt Settlement?

What is Debt Settlement?

Also known as Debt Negotiation, Debt Settlement is an aggressive approach to debt reduction, which may be appropriate for debtors with a serious amount of debt or who are considering bankruptcy. A debt settlement company negotiates with the creditors to settle the debt for a lower amount than owed, as the debtor saves his/her money for a lump-sum settlement payment. After the debt is settled, the creditor will likely send a letter stating the debt obligation was fulfilled, and should then report to the credit bureaus that the debt has been satisfied.

Creditors are motivated to negotiate the debt because when a debtor is under serious financial strain and chooses bankruptcy, the creditor may receive little or no financial reimbursement through the court proceedings. Debt Settlement may offer a viable alternative that is more likely to produce a win-win situation for both creditor and debtor.

Do I Qualify?

Not sure if Debt Settlement is right for you? Ask yourself these questions to determine whether Debt Settlement may be your best option to escape from mounting debt:

• Are your monthly expenses exceeding your earned income?
• Are you using your credit cards to get by so you can afford to live?
• Are you considering Bankruptcy as an option?
• Are your credit cards reaching the limit?
• Are you receiving collection letters or phone calls from creditors?
• Have you used all of your available resources to keep up with payments?
• Are your minimum payments becoming a struggle?
• Has a recent event caused you to go into default?

If you answered Yes to any of these questions, you could be experiencing serious financial trouble. Call us today!

What Debts Can Be Negotiated?

The following types of debt can usually be successfully negotiated:

• Credit Cards
• Retail Store Cards
• Medical Bills
• Autos in Repossession
• Unsecured Lines of Credit
• Unsecured Personal Loan
• Collections (Unsecured Debt)

Debt Settlement may be able to lower your current Monthly Payments*

Our experience in the financial industry has taught us a great deal. We are ready to apply our knowledge and experience to help you with your Debt Settlement needs. Debt Settlement, also known as Debt Negotiation or Debt Relief, is an aggressive alternative to bankruptcy that may help reduce credit card debt and other types of unsecured debts – including retail store cards, autos in repossession, and medical bills.

During the Debt Settlement Process, our goal is to negotiate with your creditors to reduce the actual balance owed. Creditors are motivated to negotiate the debt because when a debtor is under serious financial strain and chooses bankruptcy, the creditor may receive little or no financial reimbursement through the court proceedings. Debt Settlement may offer a viable alternative that is more likely to produce a win-win situation for both creditor and debtor. Call us today to see if you qualify!