What is a Short Sale?
A short sale can be an excellent solution for homeowners who need to sell, and who owe more on their homes than they are worth. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved.
But to be technical, here's a more official definition:
- A homeowner is 'short' when the amount owed on his/her property is higher than current market value.
- A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then 'sold short' of the total value of the mortgage.
For homeowners to qualify for a short sale, they must fall into all of the following circumstances:
- 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.
This seems simple enough, but it is a complicated process that takes the expertise of experienced professionals. Together, you can identify all possible options and, when possible, a CDPE can assist you in the quick execution of a short sale transaction.
RE/MAX Trains Agents to Help Families Avoid Foreclosure
April 09, 2010
“We sometimes forget that behind every distressed property is a distressed family and we need to use every tool at our disposal to help them through a very personal crisis,” said Dave Liniger, RE/MAX International Chairman and Co-Founder. “The new HAFA plan provides tremendous incentives for distressed homeowners and their lenders, which speeds up the short sale process, and provides a realistic alternative to foreclosure.”
A short sale occurs when a lender allows a homeowner to sell their home for less than what is owed on the mortgage. Short sales reduce financial losses and result in less damage to the homeowner’s credit. However, short sale transactions have been difficult to navigate, and the HAFA guidelines seek to streamline the process and offer cash incentives to both homeowners and lenders who successfully conclude short sale transactions.
Among the notable participants featured in the RE/MAX broadcast was Laurie Maggiano, Director of Policy for the Treasury Department’s Office of Homeowner Preservation. Her department was responsible for creating the guidelines of the new HAFA short sale program. “Of course, the Administration’s first goal is to keep families in their homes, but when that is not possible due to economic or personal reasons, HAFA provides a viable alternative to foreclosure and a graceful exit from a stressful situation,” Maggiano said.
Also traveling to Denver to appear in the RE/MAX broadcast was Matt Vernon, a senior vice president with one of the nation’s largest residential mortgage companies, Bank of America. Recognizing that delays from lenders have been a hindrance to short sales in the past, Vernon promised “We have zero tolerance for not following up with homeowners and our Realtor partners, and have instituted a policy that we must respond to inquiries within 48 hours.”
Providing an online transaction platform to Bank of America, Equator Financial Solutions has registered over 665,000 real estate agents and 14,000 asset managers. Equator CEO, Chris Saitta, also joined the RE/MAX broadcast lineup. “RE/MAX and Equator share a commitment to short sale and REO training for agents,” Saitta said during a pre-show interview. “Equator proactively created a HAFA solution that has already allowed their clients to close more than 150,000 short sales, while other servicers are just now thinking about how to handle them.”
After the satellite and Internet-streamed broadcast, it was announced that Equator would become a RE/MAX Approved Supplier and provide discounts to its agents for Equator training. This is Equator’s first such arrangement with a national real estate organization.
For the past two years, Liniger and other RE/MAX executives have lobbied for a comprehensive overhaul of the short sale process during numerous Washington, D.C. meetings with Administration leaders, including Maggiano and the Treasury Department.
Liniger has also been encouraging RE/MAX agents to pursue distressed property and short sale training. In just over a year’s time, nearly 15,000 RE/MAX agents have earned either the Certified Distressed Property Expert (CDPE), or the Short Sales & Foreclosure Resource (SFR) professional designations, giving RE/MAX more designees than any other real estate organization.
RE/MAX continues its dedication to helping families who are facing financial difficulties and assisting in the navigation of the new HAFA program. “I believe short sale transactions will increase significantly this year,” said Liniger. “With these new guidelines, we should be able to provide a positive outcome to more families than ever before.”