Frequently Asked Questions
It is understandable to have questions when coping with a new and challenging situation, especially when a home is at stake. The reality is that millions of homeowners across the country are finding out that they have more questions than answers. We hope that the following information will help you better understand the circumstances. If you have further questions not addressed below, or would like additional information resources, feel free to Contact Us.
Do I qualify for a short sale?
The qualifications for a short sale include any or all of the following:
- 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.
What is a mortgage modification?
A mortgage modification is a process through which your mortgage lender changes any or all of the following:
- Your interest rate
- Your principal balance (through a reduction)
- Your loan terms (example: from an adjustable to a fixed rate)
This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.
Why would a lender modify my mortgage?
Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.
What do I need to qualify for a mortgage modification?
According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:
- Information about your first mortgage, such as your monthly mortgage statement
- Information about any second mortgage or home equity line of credit on the house
- Account balances and minimum monthly payments due on all of your credit cards
- Account balances and monthly payments on all your other debts such as student loans and car loans
- Your most recent income tax return
- Information about your savings and other assets
- Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources
If applicable, it may also be helpful to have a letter describing any circumstances that caused your income to reduce or expenses to increase (job loss, divorce, illness, etc.)
How do I qualify for a mortgage modification?
The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):
- Loss Mitigation
- Mortgage Modification
Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.
What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?
You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents like me, with the Certified Distressed Property Expert® Designation, have undergone extensive training in how to process and negotiate short sales. A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.
What is a Home Affordable Refinance?
If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.
What are the qualifications for a Home Affordable Refinance?
According to the resources released by the government, following are a list of qualifications:
- You are the owner occupant of a one- to four-unit home
- The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see Useful Links)
- At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
- You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
- You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan
How much do I have to pay you to help me with a Short Sale?
Unlike some other real estate agents, your Greater Tampa Short Sale Advisors do not charge any upfront fees or any other fees at any time. We are compensated by commission paid at closing by the primary lender. We split this commission with any cooperating broker who may represent a buyer.
Does my home have to be worth a certain amount for you to help me?
No. We understand the agony and stress that many homeowners find themselves in nowadays. We believe all homeowners need and deserve our help. We will handle a Short Sale of your home without regard to the asking price. This does not mean we will accept everyone as a client. There is other criteria used to determine if we are best suited to help your particular situation.
Can I do a Short Sale on a second home or investment property?
Yes. You may sell any number of properties by the Short Sale process. The lender will look at your ‘big picture’ financial position and you will need to disclose all of your assets including other properties.
Will the condition of my home impact a Short Sale?
No. The condition of your home has no special bearing on a Short Sale. Keep in mind that a Short Sale is still a sale, and you must attract a buyer. We encourage you to keep your home in good condition, but it is not necessary to make major repairs in order to complete a Short Sale.
In what areas of the Greater Tampa Bay Area do you handle Short Sales?
We assist distressed homeowners throughout Hillsborough, Pasco, & Pinellas counties. We specialize in working with homeowners in the Carrollwood, New Tampa, Land O’ Lakes, Lutz, New Port Richey, Odessa, Palm Harbor, Tarpon Springs, Trinity, Wesley Chapel, and Westchase areas.
What documentation is required for a Short Sale?
There is substantial paperwork involved in a Short Sale and we ask you to assist us by providing the most recent 3 months statements for all your financial accounts, including bank statements, 401k, investment accounts, the last two years tax returns and two most recent pay stubs.
As the process is ongoing, we ask that you save new relevant documents as you recieve them, so that we may present them to the bank when an offer is received. In addition, you will be asked to sign an authorization for us to represent you, disclosures about your property and miscelaneous documents. A Short Sale differs from a regular sale in that you must provide your Realtor or Attorney with all of this financial information. Rest assured we treat all your confidential infomation with the utmost of care.
How much less will the bank accept on a Short Sale?
There is no easy answer to this question. Even the same lender will make adjustments to their policy depending on their risk exposure. Very often the bank is only servicing the loan and they will have to get approval from the investors who own it. We will be happy to disuss this in more detail with you.
If I do a Short Sale, how will my credit score be impacted?
As of today the major credit bureaus do not have a code to indicate a Short Sale on a persons credit report. If you are late with your payments or do not pay off your loan in full, your credit score will be penalized as normal. Therefore the impact of a Short Sale on your credit will be much less than if your home is lost to Foreclosure. Typically a homeowner is eligile to buy another home 2 years after a Short Sale, whereas they may have to wait up to 7 years to obtain financing after a Foreclosure. The other big diffference is that a borrower will always be asked if they have ever had a Foreclosure, not if they had a Short Sale.
Does the State of Florida allow Deficiency Judgements in a Short Sale?
Yes. In Florida, the homeowner may be subject to a Deficiency Judgement in a Short Sale or Foreclosure. The advantage of a Short Sale over a Foreclosure is that the borrower will have an opportunity to negotiate the amount if any of this deficiency. HOWEVER – Under the HAFA guidelines, the participating lenders have agreed not to pursue a deficiency judgement. This is great news for distressed homesellers.
What are the tax consequences of a Short Sale?
All we can say is that there may be some tax consequences if you complete the sale of your home by the Short Sale process. You may be liable for taxes on any amount forgiven by your lender, especially on second homes, home equity loans and lines of credit. Please consult your tax advisor or CPA for an accurate assement of your personal situation.
Why does it take the bank so long to approve a Short Sale?
The good news is that since the introduction of HAFA, it now takes a lot less time to complete a Short Sale. At the beginning of the mortgage crisis, banks developed a bad reputation for being slow or nonresponsive with Short Sales. This has changed recently as the banks have put systems in place to handle the volume of Short Sales. Nowadays the biggest reasons for a delay in the Short Sale process are due to improper or incomplete offer packages being submitted to the banks, so it is important to work with Real Estate Agents who understands what is requried to get a Short Sale completed. Another reason is the banks need to wait for approval from the investors who own the original mortgage. Keep in mind that very few banks still own the loans they originated. They usually sold the loans to investors and now collect revenue for servicing these loans.
Do I need to retain an attorney to negotiate the short sale?
No. However, we highly recommend that you speak to an attorney before beginning the short sale process. An attorney can answer any legal questions you might have pertaining to a short sale. They can also discuss other options such as foreclosure defense and even possibly bankruptcy. This allows you to know all of your options before proceeding with the short sale. We know of a law firm that offers FREE consulations to our clients that we refer over to them. Below is a video explaining the different types of bankruptcy.
If there are any questions we have not answered, please make a note of them and we will be happy to get you the answers.
Team 54 Realty– Short Sale Real Estate Agents
We are members of the Greater Tampa Association of Realtors, Central Pasco Association of Realtors, Florida Association of Realtors, and National Association of Realtors, as well as the Mid-Florida Regional Multiple Listing Service.
These relationships ensure that our Buyers will have access to the thousands of homes available for sale in Hillsborough County, Pasco County, and Pinellas County Florida while also providing our Sellers with internet exposure to capture these buyers, looking to purchase a home.
As your Greater Tampa Bay Area Real Estate Trusted Advisors, we are not only committed to helping you buy or sell your home, but also serve as your Navigator, Negotiator, and Consultant. We have a fiduciary responsibility to you and intend to guide you with knowledge and integrity. We pride ourselves on our client service and dedication to assist you with all of your Greater Tampa Bay real estate needs.
Please call, text, email or fill out the online contact form today, to discuss how we can best assist you with your Greater Tampa Bay Area Real Estate needs.
With Team 54 Realty it’s about more than just real estate!
TEAM 54 REALTY
813.298.5065 Rose’s cell
813.841.8220 Joe’s cell
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