Aaron Cuha

Short Sale Deficiency Balances: What Are They and How to Avoid Them

By

Short Sale Deficiency Balances: What Are They and How to Avoid Them

The Basics

When the lender agrees to do a short sale, that means the lender is accepting less than the total amount due on the property. For complete details on this you might want to read my post on “Short Sales 101”. But for our purpose here I am going to assume that you not only know what a short sale is, but that you understand the term.

Now I have noticed numerous comments about the possibility of a deficiency balance after a short sale.  I have also received a lot of email questions and telephone calls from agents asking about what to do if the bank release does not specifically state that the short sale is in full satisfaction of the debt. In this article I will go over what you need to know to make sure this does not happen to your client.
[Read more…]

Short Sales 101

By

Wikipedia defines a short sale as the following,

“A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan.  It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency”

Seller Benefits

A short sale comes by as an assured relief, whereby you can sell your home to someone at a price lower than the mortgage balance (or, less than the loan balance).
[Read more…]

Understanding the Home Affordable Foreclosure Alternatives Program

By


In light of the rising number of property foreclosures in the United States, the government has expanded the Home Affordable Modification Program (HAMP) to include provisions and incentives for servicers to allow short sales or deeds-in-lieu as positive options for eligible homeowners in default who wish to avoid foreclosure. The new program is called Home Affordable Foreclosure Alternatives (HAFA).

What is the Home Affordable Foreclosure Alternatives Program? Here are some of its benefits:

  • Borrowers will receive $1,500 in relocation expenses from the US Government.
  • Loan Servicers will receive $1,000 from the US Government per transaction that they process.
  • 2nd lien holders will receive up to $3,000 of the sale proceeds for releasing their liens.
  • 1st lien investors can receive up to $1,000 from the US Government for “signing off” on payments that subordinate lien holders.
  • Borrowers must be “fully released” from any and all further liability.

[Read more…]