If you are a homeowner facing the threat of foreclosure, it is a wise decision to consider your loss mitigation options. Loss mitigation options are the methods employed by lenders to work with Borrowers to avoid foreclosure. The most important loss mitigation option is the short sale. However, be warned that the short sale can be a long and challenging process.
A short sale is similar to that of a regular residential sale up until the time a contract is signed by the Parties. At that point, the bank steps into the Sellers shoes to review the purchase contract and decide whether they will accept, deny or counter the buyer’s offer. There are four essential requirements a borrower must complete to finish the short sale process. A borrower must accomplish the following:
- prove a financial hardship
- obtain an offer
- establish that the value of the property is in line with the offer
- obtain final approval from the bank
The approval process, can last anywhere from one month to six months or more. Once an approval is obtained, it is imperative to negotiate any amounts that will be due to the lender in excess of the sale price. Ideally, all deficiency amounts are waived and the homeowner walks away without owing anything to the bank. This is why it is always best to have a Tama Real Estate attorney negotiate the sale for you.
Any number of issues can cause delays and derail the short sale negotiation. A common “deal killer” is if the property is subject to a second mortgage. The second mortgagee’s approval is required to move forward with the short sale. If they fail to comply, the sale cannot go through. For this reason, it is imperative that you consult a licensed Florida real estate attorney prior to engaging your lender in short sale negotiations. Many times, a real estate attorney can negotiate secondary liens off the property. This will also include homeowner or condo association liens that may have accrued from unpaid assessments. While it is always best practice to keep up with your assessments, many times a real estate attorney can help negotiate the amount owed to the association to remove the lien.
Once the terms of the sale have been negotiated and all liens removed, the sale is ready to move to closing. At closing, a real estate attorney can ensure that the documents are properly prepared and all funds change hands. Once this process is complete, the borrower is out from under the home and can move on with their lives.
Foreclosure can be a complicated and frustrating process. If you or someone you know is facing the threat of foreclosure, please encourage them to consult a licensed Florida real estate attorney immediately. The attorneys at DeWitt Law Firm are well versed in all aspects of short sales and can advise you through listing, negotiating and closing a short sale transaction. Call us first and let us help manage the process for you.