At the Law Offices of Newland & Newland, LLP we specialize in Illinois short sales. Whether it is residential or commercial real estate transactions, a short sale can be a beneficial method of reducing exposure for a property owner. Many times not only we are able to get lenders to agree to short sales but we have often gotten lenders to offer incentives to our clients to do short sales. One of our clients received $30,000 from the lender at closing to do a short sale.
Many people ask what is a short sale? A short sale is when the property is sold for less than the mortgage balance. Short sales can be done when there is more than one mortgage on the property as well.
Does a lender have to agree to a short sale? A lender does not have to agree to a short sale. It is important to contact an attorney experienced in short sales if you desire to pursue a short sale with your property.
Are there tax consequences for a short sale? There can be tax consequences for a short sale as well as a foreclosure. The Mortgage Forgiveness Debt Relief Act of 2007 does state that certain tax advantages may be lost. Whether congress renews the Mortgage Forgiveness Debt Relief Act is yet to be determined.
What is needed to short sale a property?
- Hardship Letter; a letter explaining why the mortgage is in default
- Proof of Income & Assets; the lender will want to know what investments, stocks and bonds individuals have before allowing a short sale.
- Comparative market analysis; the lender will be interested in what houses are active in the market, pending sales and what properties have sold in the last 6 months
- Purchase Agreement & Listing Agreement; the lender is interested in seeing a copy of the contract of sale as well as how much commission the realtor s earning
- Preliminary Net sheet; a preliminary net sheet is a closing statement that talks about what costs are to be incurred in the sale of the property. On the net sheet are credits for real estate taxes, real estate broker’s commissions and any other expenses such as title charges, and etc..
Short sales can be an excellent opportunity to avoid debt but not all homeowners can short sale their property. Some homeowners earn too much money or have too much in assets.
What is HAFA? United States Treasury Department proposed the HAFA short sale program November 30, 2009 with incentives to homeowners to do short sales. Not all homeowners qualify for HAFA.
Please contact Newland & Newland, LLP for more information about short selling and receiving the benefits of HAFA.