Some homeowners are unaware of their legal rights or options when it comes to their Panama City real estate ownership. If you are among the millions of homeowners that are facing pre-foreclosure YOU have options and rights other than bankruptcy or foreclosure proceedings.
One of these options is called a “short sale”. However, not all homeowners or all properties qualify for an automatic “short sale”.
A ‘short sale” means that the lender will accept less money than the total amount due on the mortgage note at that time. If the lender is not completely sure of the hardship then the lender will not accept the “short sale” or any other discounted payoffs. However, the lender may opt for the foreclosure process instead.
The “short sale” process itself (such as the listing) is agreed between the homeowner and the listing agent ONLY. After this, the real estate agent begins the negotiations with the lender as a 3rd party and on behalf of the present homeowner.
The lender will request a list of documents (it depends on the actual lender as to what specific documents those will be). These will be presented to the lender to verify the homeowner has a valid hardship. If a hardship is demonstrated then the lender may accept the “short sale” as an alternative.
After the lender accepts the “short sale” option they request the current value of the property through a Comparable Market Analysis (done by the real estate agent). The lender will then hire an independent real estate broker to do the same and compare the similarities or differences. Following this process, the lender will also request an exterior and interior inspection by a real estate broker. The lender will analyze these and order a formal appraisal for the home.
The lender will analyze what their bottom figure will be according to all the items mentioned above and the listing agent together with the title company will put together a HUD-1. This is the document that reflects the money that the lender will clear after paying the closing cost and all expenses including the real estate commissions.
The lender will have the option to collect their deficit between the money the lender clears and the money the homeowner borrowed when the home was initially purchased. The lender may give a 1099 to the home owner with the deficit so they can claim it on the taxes or may provide a forgiveness letter as to the difference in the amounts. Many banks are seeking help from the federal government in order to get credit for these letters.