This Article Is About Mortgage After Short Sales In Chicago FAQ And Answers
Julie Hayward Covers More on Mortgage After Short Sales In Chicago. Interview with Jeff Wolff, President of Illinois Distressed Property Solutions. Jeff has been in the business for over 15 years. He negotiated hundreds of short sales with multiple lenders. He knows about qualifying for a mortgage after short sales in Chicago. Here he provides his expertise on the most commonly asked questions regarding Mortgage After Short Sales In Chicago.
Mortgage After Short Sales In Chicago Advice By Expert
Here is a question and answer session between Jeff Wolff and Chicago Real Estate Agent Julie Hayward about FAQ and Answers on Mortgage After Short Sales In Chicago :
QUESTION: Why should I do a short sale vs. a foreclosure?
- A short sale is the best option for your credit
- Though it will impact consumer credit if payments are missed until closing
- Credit will start repairing itself once the short sale is complete
- A Deed in Lieu (DIL) is a secondary option usually offered by the lender if the short sale process does not attract a buyer for the property
A foreclosure on record is most damaging in many ways:
- It puts a judgment against the borrower(s) for the deficiency balance that the lender can come back after the buyer for up to 10 years
If a second lien holder is part of the short sale, they almost always sue the borrower(s) for their deficiency balance, causing the borrowers to take other actions such as bankruptcy.
Sellers Concession With Short Sale
QUESTION: My bank offered cash for keys. Can I get a larger seller’s concession if I do a short sale?
- This all depends on the investor who owns your loan
- Typical relocation incentives from Fannie Mae/Freddie Mac are $3000
- FHA loans start at $3000 but are often reduced to meet the net of a short sale
If the investor is someone other than those three, a current program, if qualified, is the HAFA Short Sale program with relocation incentives up to $10,000.
Approval By Lenders On Short Sale
QUESTION: How long does approval usually take?
- Typical short sales take about 90-120 days
- FHA loans typically take more than 6 months due to strict guidelines
Mortgage After Short Sales In Chicago And Short Sale Process
QUESTION: What is the process and what is important to know about the process?
- We always pre-qualify a seller as to whether they will qualify
- The number one question is: what is your hardship?
Short Sale Prior To Sheriff’s Auction
QUESTION: My auction date is less than a month away. Can I still do a short sale?
- In most cases, yes
- But you have to act quickly and provide the required paperwork to the lender
- The property needs to be listed and your short sale team in place with third-party authorization
QUESTION: If I get the paperwork in by the required date, will it stop the auction?
- This all differs by the lender and the investor who owns your loan
- It also depends on the county your property is in
- It’s best to make the decision to do a short sale before an auction is set
- If this isn’t possible, your best chance of success is greater than 25 days before the auction
Finding New Home After Exiting Short Sale Home
QUESTION: My short sale got approved. What if I can’t find a new home by the approval deadline?
- Once a short sale starts, I advise the sellers they need to have an idea where they may move next
- There should be a minimum of 90 days from the time the property is listed before a closing
- A future landlord should understand you have suffered and your credit score is going to be lower but you took the initiative to short sale and start anew and landlords are fairly reasonable if you explain properly
There have been millions of homeowners who have had to short sale in this country and had to find a rental with lower credit.
Repairs And Window Dressing Home Prior To Listing
QUESTION: I can’t afford lawn care or repairs. What can I do?
- The short sale team with work with the lender’s property preservation group to cut the grass, or winterize the home in the winter if vacant
- They will not do any repairs, though
- They will ensure the lawn is maintained and the house secure if it is not occupied
Challenges With Short Sales And Mortgage After Short Sales In Chicago
QUESTION: What are the biggest challenges with short sales?
- Getting full cooperation from the sellers
- Getting a fair bank appraisal/BPO
- Getting an offer in a weak market
Real Estate Investors Buying Short Sale Homes
QUESTION: I am an investor, how low will a lender go on a property?
(I get asked this all the time:
- “What do you think the lender will accept?”)
- An upfront analysis is done before all short sales are listed
- We can determine a range of what the fair market value is as perceived by the lender
- The lenders will generally accept as low as 88% of FMV determined by their appraisal
- Lenders do not put any emphasis on a cash deal in most cases
- They want the highest amount for the investor
QUESTION: Can I apply for a loan modification at the same time as putting my property on the market for a short sale?
- If home retention is the goal, a loan modification should be completed before a short sale
- If you are denied a loan mod, you will automatically qualify for a short sale, which is when you will then list the property
Costs And Fees To Homeowners To Do Short Sale
QUESTION: What does it cost me to do a short sale?
- There are usually no costs to the borrowers for a short sale if qualified
- All fees such as commission, attorney, tax, and title charges are credited by the lender from the accepted purchase price of the buyer for that property
- If a seller has more than $5000 in liquid assets (bank accounts) the investor may request a 20% cash contribution of that amount
QUESTION: I know the property is worth more than the bank is accepting. Why are they accepting that amount?
- The amount the lender accepts on any short sale is based on their current BPO or Appraisal and typically will accept 95% of that value
- It’s all based on the value the lender receives from their appraisals
Deficiency Balances After Short Sale
QUESTION: What happens with the deficiency balance if I complete a short sale?
- If the property is a primary residence, you will qualify through 2016 for the 2007 Mortgage forgiveness act
- A 1099-c will be issued
- That amount goes on the IRS 982 form and zeroes out any tax liability
- Congress should extend for another 2 years
- They typically do it in December of the calendar year
- If the property is an investment, the sale will most likely result in a capital loss to offset the deficiency balance
Please seek a Certified Public Accountant for your situation.
About The Author Of Mortgage After Short Sales In Chicago: Julie Hayward
Julie Hayward is the author of this ARTICLE On Mortgage After Short Sales In Chicago and our Guest Writer at Gustan Cho Associates Mortgage and Real Estate Mortgage and Information Resource Center. Julie is also a prominent real estate agent in Chicago and the Chicagoland Area. Julie is also the President and Managing Broker at EDGE REALTY LLC. Julie has published her first book, OPPORTUNITY KNOCKS, which is due to hit newsstands soon. We will let our viewers and Julie Hayward’s fans know.
March 4, 2021 - 5 min read