Frances Navarro Legacy Real Estate & Associates Agent

Frances Navarro

REALTOR® CalBRE #01398249

Short Sales

Short Sales

A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.

This seems simple enough, however it is a complex process that takes the expertise of experienced professionals. I am a Certified Distress Property Expert and hold the CDPE® Designation and I am ready to identify all possible options and, when possible, assist in the quick execution of a short sale transaction.

Understanding your options now could mean all the difference in the world.

What is a Short Sale?
A Short Sale, or short-pay sale, is when a lender agrees to accept less than is owed and close out the mortgage(s) on a property. Example: Sellers owe $500,000 on a house, but current market value is $400,000. The Short Sale Professional negotiates an agreement with the bank to accept an offer at the market value of $400,000, and the sellers are let out of the entire debt at no cost.
Do I qualify for a short sale?
In order to be eligible for a short sale and have us represent you, we must be able to prove to the lender that you have a “hardship” and are therefore unable to continue making payments on your mortgage. A hardship situation is one that is the result of some extenuating circumstances that force the borrower into a position where he/she can no longer afford the mortgage payments. While every situation is different, some frequent examples of hardship include:
  • Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  • Monthly Income Shortfall – In other words: "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  • Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
  • Unemployment or loss of primary income source
  • Inability to work due to health crisis
  • Mounting medical expenses
  • Employment relocation
  • Failure of business
  • Bankruptcy
  • Death of spouse or significant other
  • Divorce or separation
  • Incarceration

It is best to get a free consultation to see if you would qualify, please call me at 510-449-2143 to schedule an appointment with no obligation.

What is a HAFA Short Sale?
HAFA (Home Affordable Foreclosure Alternatives) is a Federal government Short Sale program that some banks are required to offer as a possible option to owners of some distressed properties. In most cases it is harder to qualify for a HAFA sale than a standard short sale, but with nearly all lenders if a seller does not qualify for HAFA their short sale request is automatically moved to a standard short sale review. Here is the official HAFA Program website. The Short Sale Group handles both HAFA and non-HAFA short sales, and can answer questions about the different programs available from your lender.

How long does a Short Sale take?
Usually a Short Sale will take from three to six months from start to finish, although sometimes it may take a little longer if there are multiple different lenders involved or other complications. In most cases the current residents - owners or tenants - can remain in the property throughout the process until the sale is completed.

Does the seller have to pay anything?
For our clients, almost never. Investor owners selling rental properties are sometimes asked to pay closing costs - transfer taxes, fees etc. - but personal residences are nearly always sold without any seller contribution.

Will a Short Sale cover a HELOC/second mortgage?
A Short Sale eliminates all mortgages and liens on a property - home equity lines of credit (HELOC), second mortgages, unpaid property taxes, tax liens, etc. Because each and every lienholder must agree to allow the short sale to be completed, it is critical that all negotiations be done by experienced specialists.

Can a property be sold "as-is"?
A property can be sold in any condition. We usually advise our clients not to put any more money into repairs or improvements on the property since it will not affect the process, but please contact us for specific questions about your property.

Should we do a Short Sale, or foreclosure?
Whether you should consider foreclosure may depend on the financial and legal consequences of a foreclosure. You should always, without fail, get legal and tax advice because real estate agents, unless licensed to practice law, cannot provide legal or tax advice. In nearly all situations a foreclosure is the least favorable option for the seller.

Deficiency Judgments

Senate Bill 458, that modified the CA Civil Code Procedure 580(e), a bank may not come after a homeowner for the remainder of the balance on a short sale for any loan. In addition, the banks are prohibited to ask the sellers for any money or contribution in the short sale process. This is a BRAND NEW law that went into effect on July 15th, 2011. There are a certain amount of exclusions for homeowners so it is important to talk to someone qualified and knowledgeable in short sales. This law DOES apply to any home including primary residence, investment properties and second homes. It does NOT apply however for homes owned by a corporation or LLC.

Legal Advise

I offer unlimited access to a real estate attorney for legal advise throughout the short sale process.