Foreclosure & Short Sale Info.

Foreclosure & Short Sale in West Covina CA

Although purchasing foreclosures and short sales have their risks, Century 21 Bright Horizons can help you manage your options well. We aim to give you results that will make you maximize the value of the property(s) that you plan to acquire.You can contact one of our realtors or send us a message so we can arrange for a scheduled meeting to discuss your property acquisition alternatives.Get expert advice from Century 21 Bright Horizons, California’s real estate markets and investment opportunities today!

FORECLOSURE VS SHORT SALE
Ineligible to Get Fannie Mae Backed Loans for 5 Years Get Fannie Mae Backed Loan after only 2 Years
Credit Score may be Lowered from 250-300 points. Affects score for over 3 years. Credit Score may be lowered as little as 50 points. Affects Score for as brief as 12 to 18 months.
Foreclosure will remain as public record on credit history for 10+ years Short Sale is not reported on a credit history.
Employers have right to check credit and foreclosure may affect current or future employment. This is a very normal process in today’s hiring procedures since the economic donwnturn. Short Sale is not reported on a credit history.
If property is foreclosed or sold at a trustee sale (Pre-foreclosure Auction before Bank repossession), the bank will most likely post a public eviction notice to vacate owners and a Foreclosure Sign may be posted on the property after the sale is Finalized. Without the embarrassment of the Foreclosure sign on the property, neighbors will see it as a regular sale. Short Sale is a dignified and confidential means of mortgage debt relief.
Homeowner liability after foreclosure. If you have two loans on your property, you may not be protected against personal liability by the second lender. If the first lender forecloses on the property. Short Sale can possibly protect you from personal liability from the second lender by successfully negotiating for the lender to accept a loan payroll for less than what’s owed and give you a written release from personal liability.


QUESTIONS ABOUT THE SIMPLIFIED SHORT-SALE PROCESS

Q.    WHAT IS A SHORT SALE?

In a Short Sale a lender agrees to let a homeowner facing financial hardship sell a home for less than the mortgage owned.   A Short sale is an attractive alternative to foreclosure, typically not pursued until after other efforts to keep the owner in the home have been exhausted.  There are potential tax consequences that should be discussed with a tax professional.

Q.    WHY IS A SHORT SALE BETTER THAN FORECLOSURE?

Typically, a short sale is ales damaging to the borrower’s credit.  The former owner can qualify for a mortgage backed by Fannie Mae or Freddie Mac to buy another home in as few as two years, far sooner than if there had been a foreclosure.  Short sales also help protect other property values in the community by keeping the home out of potential disrepair.

Q.    WHY HAS THE U.S. TREASURY ISSUED NEW SHORT-SALE GUIDELINES?

Because of the challenges many homeowners have faced in their attempts at short sales.  Century 21 Bright Horizons has worked closely with major lenders, the U.S. Treasury and other federal agencies to streamline and standardize the process.  The new guidelines are in response to this advocacy by Century 21 Bright Horizons and others in the industry.  Short sales are seen as a critical component in stemming the increasing number of foreclosures and stabilizing the housing market.  More than 75 percent of the mortgages in the United States are covered by the recently streamlined short sale guidelines issued by the U.S. Treasury Department.

Q.    WHAT’S BEEN IMPOROVED IN THE SHORT-SALE PROCESS?

Under the Treasury’s Foreclosure Alternative Program, mortgage servicers have 10 business days to respond to a short sale offer.  In the past, a lack of timely response has been one of the main reasons for delayed or derailed short sales.  Also, paperwork and documentation are now standardized.  Previously, such procedures varied widely between lenders.  Various deadlines in the short sale process also have been standardized.

Q.    WHAT’S IMPROVED FOR THE HOMEOWNER?

Under the Treasury program, a successful short sale will release the borrower fully from the primary mortgage obligation.  This lender will not pursue a deficiency judgment.  Additionally, homeowners who complete short sales are eligible to receive $3,000 to offset the expense of moving from the home.

Q.    WHAT’S THE INCENTIVE FOR A PRIMARY LENDER TO APPROVE A SHORT SALE?

Using program guidelines, lenders will determine a minimum acceptable offer for the property.  Typically a lender’s loss on a short sale is less than the loss it faces should the property go into foreclosure.  Through the Treasury program, mortgage services receive $1,500 for every short sale closed.

Q.    HOW DOES THE PROGRAM WORK?

If the owner of a principal residence does not qualify for refinancing and has exhausted Making Home Affordable, Loan Modification options, or if they make a direct short sale request to a lender in the program, the lender determines if a short sale is possible.  If it is, the borrower is given at least 120 days (up to a year, depending on local market conditions) to sell the home using a real estate agent experienced in the local market.  Meanwhile, the foreclosure process can move forward, but it cannot be finalized until after marketing period has expired.  During the marketing period, lenders must respond to a fully completed “request for approval of a short sale offer” within 10 business days.

Q.    WHAT’S THE BEST WAY TO FIND A REAL ESTATE AGENT TO HANDLE A SHORT SALE?   

If you do not already have a Century 21 agent to work with, use the “Find An Agent” featured on century.com identify your market area and then search for an agent with one of the following designations:  Certified Distressed Property Expert (CDPE) Five Star Institute (FSI) Short Sale Foreclosure Resources (SFR) Short Sales Foreclosure & REO (SSFR).  You also can consider agents with the residential sub-specialties of “Foreclosure Property” or “Short Sales.”

Q.    DOES THE BORROWER CONTINUE TO MAKE PRIMARY LOAN PAYMENTS DURING THE SHORT-SALE MARKETING PERIOD?   

Yes, in some cases.  The amount is determined by the loan servicer in accordance with terms of the Treasury guidelines.  If there is a payment, it cannot exceed 31 percent of the borrower’s gross monthly income.

Q.    WHAT IF THERE’S A SECOND MORTGAGE, HOME EQUITY LINE OF CREDIT OR OTHER JUNIOR LIEN?    

The borrower is responsible for either paying off such debt or negotiating release from the debt and any potential for deficiency judgment.  An experienced Century 21 short sale expert can help you with this process.  The Treasury program provides some financial incentive for junior lenders and investors who hold such loans to participate in the short sale and release the liens.

Q.    ARE THERE RESTRICTIONS ON WHO CAN MAKE A SHORT SALE OFFER?    

Yes.  Among the program’s many restrictions are requirements that the property not be sold to a relative and not be occupied or repurchased by the former owner.  The buyer may not receive any funds from the transaction and cannot sell the property for at least 90 days after closings.

Q.    IS A SHORT SALE THE ONLY ALTERNATIVE TO IMMINENT FORECLOSURE?    

If a short sale is not successful, the lender can opt to take a “deed in lieu of foreclosure.”  In this process, the homeowner gives clear title to the property to the lender.  Under terms of the Treasury program, the borrower is released from the remaining mortgage obligation and can still receive the $1,500 for relocation expenses.  The borrower then has 30 days to vacate the property.  In some cases, it’s possible to pursue a “deed in lieu of foreclosure” without pursuing a short sale.

Q.    IS THERE AN EXPIRATION DATE FOR THE TREASURY PROGRAM?    

Borrowers have until Dec. 31, 2012 to enter into a short sale or deed in lieu agreement with their lender under terms of the Treasury program.

Q.    ARE SHORT SALES STILL POSSIBLE FOR BORROWERS AND LENDERS NOT COVERED BY THE MAKING OF HOME AFFORDABLE PROGRAM?    

Are short sales still possible for borrowers with mortgages not covered by the Treasury program’s incentives and guidelines? Century 21 agents with short sale expertise can help such homeowners pursue a short sale with their mortgage servicer or investigate other possible options.

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