The following is not to be construed as legal advice. Consult an attorney.
What is the Kayser Short Sale Law Firm?
A law firm licensed in Missouri and Illinois with extensive success in facilitating short sale transactions, our firm specializes in working with lenders to obtain approval for the short sale in order to get the subject property sold.
Will I have to pay back the rest of the amount owed on my mortgage after a short sale?
As with most legal questions, it depends.
First, it depends on which state the property is located. There are some states with anti-deficiency statutes that preclude banks pursuing the remaining balance on the loan (the legal term for the remaining balance is “deficiency”). However, anti-deficiency statutes are not common, so this question will often require another level of analysis.
Next, it will depend on the investor of the loan. Loans that are backed by Fannie, Freddie, FHA, and VA will allow for a full waiver of a deficiency upon completion of the short sale and full compliance of the terms of the short sale approval. However, there are some narrow exceptions that may require the seller to make a cash contribution at closing to offset a sum of the outstanding balance in order to be granted a full waiver of the rest. These requested cash contributions are the exception to the rule and can even be countered by the seller in some circumstances.
Finally, if a private investor has backed the loan, the waiver of deficiency will depend on that particular investor’s policy. Some privately held banks will negotiate the deficiency on a case-by-case basis. Although policies can vary, most of these private banks will primarily focus on the seller’s financial position in determining whether to waive all or part of the deficiency.
How does bankruptcy affect a short sale?
Lenders cannot consider a short sale if the borrower is in active bankruptcy. Until the necessary documents are filed with the bankruptcy courts. There are many bankruptcies that are filed to save a homeowner from the deficiency judgment or shortage in the sale of their home– when really all they needed was a short sale of their home!
A bankruptcy stays on the homeowner’s credit report for 10 years. Bankruptcies typically only delay the inevitable: a foreclosure. Then the homeowner has both a bankruptcy and a foreclosure on their credit report. This is the worst-case scenario for anyone.
What will happen the defaulting homeowner’s credit and will they be responsible for the deficiency?
An agent should not be answering these questions. Short sale questions are best answered by an attorney who answers these questions on a daily basis. You do not want to make any representations as to this nature since your client can hold you accountable after the closing due to something they misunderstood. At Kayser & Associates, we make your job as easy as possible by asking you to do one thing: sell the home as close to the “fair market value” as possible. That’s it. Do not answer any legal questions asked by your clients. Simply refer them to us and we will handle everything.
How long does the process take?
In general, from submittal of the short sale offer (not including the time it will take to get an offer after the property is listed) to bank approval (not including the 30 days or so it takes to close after approval) is usually 45-60 days. The length of the process will also depend on who the lender is, if it is a GSE loan, mortgage insurance, number of mortgages, participation of the borrower/seller, the load at the Loss Mitigations Department at the lender’s office, fixed timelines of milestones at the banks processing center, the efficiency of the lender, and investors such as Fannie Mae, Freddie Mac, VA, FHA.
The bank referred my property to foreclosure. Is it too late to do a short sale?
It is NOT too late! With a team of experienced professionals on your side, you can get a foreclosure sale canceled or postponed to allow time for short sale approval. Banks are generally able to recover more money in a short sale than a foreclosure sale, so the bank will often benefit in a short sale as well.
However, time is of the essence when the foreclosure process begins, so you must act quickly. A qualified attorney should be involved in the transaction immediately!
What are the keys to a successful short sale?
You must be prepared to respond to document requests on a timely basis. The documents required must be complete and compliant with lender specifications. You must also:
- Have a genuine drive to succeed in the process– A motivated seller is far more likely to receive a favorable outcome than one who is unmotivated.
- Have a team of professionals experienced with short sales working with you– Including a real estate agent and attorney.
Take care of your property– The condition of the home is your responsibility until the closing is complete!