Who Qualifies for a Short Sale?

In order to qualify for a short sale, the seller must prove to the bank one or more of the following conditions:

  • Loss of job, and difficulty in finding new suitable job
  • Job Relocation, when equity is deficient
  • High medical expenses due to disability, injury or illness in family
  • Divorce
  • Unable to afford the loan from the beginning
  • House needs unexpected major repairs
  • Overextended Credit
  • Changing Economy
  • Adjustment in mortgage payment due to interest rate or an unforeseen increase in living expenses
  • Incidentally, these are also the most common reasons for a foreclosure.


Why Would a Lender Accept a Short Sale?

Why would a lender accept less than they are owed?  Simply stated, the alternative is a foreclosure.  Just as with
the borrower, there are significant consequences to the lender if they foreclose.

  • The legal costs of eviction and repossession,
  • The loss of loan payments during the foreclosure process until it is re-sold
  • A foreclosed house will need work before it can be resold
  • After the foreclosure, the bank has two options: Sell it at the courthouse steps, or try to resell in the market.

If they resell in the market, they are penalized by the government by freezing 3-10 times the loan amount so
that the lender cannot lend those funds to another borrower.


Will my lender consider a Short Sale if the mortgage is current?

Sometimes, some lenders will accept a Short Sale file for approval on loans that are not delinquent.
Other lenders will not accept the file until the loan is delinquent.


Do lenders approve all Short Sales?


What if a property needs work, can I still apply for a Short Sale?

Yes. In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property
that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.


What is a Short Sale Packet and What Needs to be in it?

A short sale package it used to determine whether a homeowner can afford the property. Our team will work with you and your realtor to gather the information needed to meet the bank guidelines and streamline the process as efficiently
as possible. Below are some of the standard items needed to complete a short sale proposal:

  • The Listing Agreement
  • Authorization to Release form (to allow agent to discuss with bank)
  • Hardship Letter (see “How to Qualify” above)
  • Financial Statement
  • Seller Net Sheet (a copy of the HUD form with offer)
  • Contract (when offer is accepted)
  • Buyer’s Proof of Funds (with offer)


What are the Tax Consequences to the Seller of a Short Sale?

Before, the Seller was sometimes required to declare the difference between the loan principal and the
amount the bank received as income on their tax forms, and pay tax on it.  In November 2007, a law was
passed that changed this.  Effective January 1, 2008, “Forgiven Mortgage Debt” (the difference between the
principal and the amount the bank received) is excluded from taxable income.  There are restrictions.  In order
to qualify for this exclusion, the house must be occupied by the owner as a principal residence (not a
summer home, vacation house, rental property, etc.).  Investors do not qualify.  Please check this link to the
http://www.irs.gov/irs/article/0,,id=179073,00.html IRS website for further explanation.


I have more than one mortgage on my property. Is that a problem?

No. Subordinate lenders are more flexible than 1st mortgage holders.


What if I have 2 mortgages held by different Lenders?

When you have 2 loans with the same lender, it is more beneficial to them, as there is no need to negotiate
with another lender.

When the two loans are with different lenders, the process is a little longer, but the second lender is the one
who has more to lose if they don’t reach a settlement. This is because if the property goes to foreclosure, the
first loan is the first one to be paid and the second usually nets nothing.


Do I have to be past due on my mortgage to be able to get the benefit of a
short sale?

No, but it is likely that the lenders’ guidelines will prevent them from formalizing a short sale if the loan is not past
due. This means, for them, that the borrower has the means and can continue to pay on the loan each month.
In the current market conditions, it is possible that a bank would accept a short sale, even when the borrower is current.


What is a BPO?

A Broker Price Opinion (BPO) is when the lenders contact their own Broker/Real Estate Agent and pay them to
render an option on the condition, value and time on market for the property. This is because many lenders do not
have the knowledge of the market in Georgia, because their offices may be in Texas for example.


If a lender saves so much money working out a short sale arrangement, why do they request so much information and why does it take so long for them to work a file?

The lender wants to make sure that a borrower is truly having financial problems and is not one of those people
who for various reasons just wants to stop paying for the property and the mortgage debt. If the borrower has liquid
funds, the lender will want the borrower to use them in the sales process. The lender also wants to make sure the
borrower is not selling the property to a related party for the sole purpose of locking in a reduced pay off.
The bottom line is that the lender is going to manage the transaction with the objective of recovering the most money
for the lender. The time frames involved cover a multi-step negotiation process between the borrower and the lender
with either the lender or borrower objecting to certain terms and making various counter proposals before coming
to an agreement. Third party inspections and BPO’s will also need to be done before the negotiations can be
formalized in an agreement.


What is a hardship letter?

This is a letter that explains the borrower’s current financial circumstances. Which circumstances have changed from
when the house was purchased, and why the mortgage payments can no longer be made. These circumstances are
what led to a borrower’s inability to make payments and to pay off the loan in full. This letter must be written by the
borrower, and be sincere in demonstrating (with documentation) that it is the truth.


What types of information does the lender require the borrower to submit?

Along with the Hardship letter, each lender will have different forms that we will need to complete. All lenders
generally require various items such as two months of bank statements, pay stubs, past tax returns, W2, etc.
Usually each Short Sale package that I submit is over 70 pages long.


How long does it take to complete a short sale?

The time frame for the lender to receive and evaluate the short sale proposal is about 8 weeks from the time the
offer and Short Sale Package are received. Buyers need to realize that this is a lengthy process.  This is why it is
very important to work with a Short Sale Specialist who knows how to manage the transaction. The other agent and
the buyer may get cold feet at the end, and the transaction may fall through.


Why does the bank accept less than they are due?

They lose less on a short sale. On average, lenders lose tens of thousands of dollars less on a short sale versus a full foreclosure. It is simply in their best interest.


Can a borrower do this for themselves?

Yes, but doing it alone and on the phone with the lender leads to inconsistent results that are, frequently, not accept
able to the borrower. Working with us, with written negotiations, yields more consistent results.





Will I have to pay all of the late fees and penalties?

No, not in the majority of cases. We are seeing that most lenders will either waive the late fees or allow you to include any outstanding amounts into the new loan.


Will my bank need to do a physical inspection of my home?

No, not in the majority of cases. In fact, we have yet to run across a situation where the lender has needed to do another inspection.


How can I find out if I qualify for a loan modification?

We are seeing that the #1 criteria lenders look for to approve loan modifications is proof of your ability to afford
the new loan payment now and in the future. You provide us, The Jeff Quintin Real Estate Super Team, properly completed financial statements and proof of your income, such as pay check stubs, bank statements, etc, and then
we advocate to the lender on your behalf.


Can I still ask for a loan modification even if I am not currently delinquent?

Yes. We are now witnessing that most lenders will accept loan modification applications from homeowners who foresee a problem meeting their home loan payments due to interest rate resets or financial hardship.  The Federal government is urging lenders to proactively reach out to homeowners who face potential default.  The Jeff Quintin Real Estate Super Team’s loan modification process allows you the homeowner to apply for a loan modification without being currently delinquent.


What is an acceptable hardship situation?

While each homeowner’s situation is unique, we are seeing that lenders generally consider the following divorce/ separation, death of a spouse or borrower, illness/medical bills, military service, loss of job/income, increase in
property tax, unavoidable home repairs, home value depreciation, and short-term/permanent disability as
acceptable reasons to consider a loan modification. A hardship letter which will be included in your loan
modification application package will help the lender understand your current circumstances and intentions.


Does a loan modification stop foreclosure?

Yes, that is one of the purposes of a loan modification. When The Jeff Quintin Real Estate Super Team completes a
loan workout solution with your bank, your loan is immediately brought current.


What about my missed payments-can they be added back into my loan?

Yes, in our experience missed payments can be added to the new loan balance and then spread out over the term
so you can then afford the new loan payment. We have seen that some lenders may require a “good faith”
payment to start the loan modification process.


How do Banks and other Lenders perceive Loan Modification? Would they rather foreclose?

At The Jeff Quintin Real Estate Super Team, we have seen that Banks DO NOT prefer foreclosure to a reasonable, workable loan modification. Contrary to public opinion, banks are not looking to scoop up all the homes they can find. They have more real estate in their portfolios than they can handle. The average foreclosure costs the mortgage lender $50,000 and in today’s economic market the number of foreclosures is growing at an alarming rate. It is almost always in the lender’s best interest to participate in a loan modification program.


How long does it take the Loan Advocacy Group to complete our loan modification once we have submitted all of our paperwork?

Once you have submitted all of your paperwork, it will take anywhere from 2 weeks to 4 months. This depends on the stage of foreclosure you are in and your financial position. Typically it takes several weeks to complete a work out agreement and stop foreclosure proceedings.


Do I have enough time to stop my foreclosure?

You still have hope until the foreclosure sale occurs. If a sale date for your house has been set you need to act fast.
Sales set for the next day may be stopped, but this is very risky and some lenders will not agree to it. Your best
option is to take action immediately and contact the The Jeff Quintin Real Estate Super Team before it is too late.


I’m currently in bankruptcy. Can you still help?

Yes. But we cannot negotiate a work out agreement with your lender until your mortgage has been discharged or dismissed from the bankruptcy proceedings. The Jeff Quintin Real Estate Super Team’s professional loss mitigation consultants can still evaluate your case and explain the best options to save your home. Then when the mortgage is
out of the bankruptcy we can proceed with the home foreclosure help. Sometimes after bankruptcy it is easier to make a mortgage payment because other debts have been discharged.


I’ve already talked with my lender and they just want all their money. Can you still help me?

Yes. Most clients have experienced this kind of inflexibility from their lenders before calling us. The Jeff Quintin Real Estate Super Team works to get your bank to listen to your needs.


What if I can no longer afford my home? Can you still help me?

Yes. If you are certain that you cannot afford your home any longer and wish to sell, we can help you to secure a short sale payoff. Often times these agreements can be arranged at low or no cost to you.


What can I expect from a loan modification?

Loan modifications may result to the following:

  1. Lowered monthly payments
  2. Interest rates reduced to 2% – 6.5%
  3. 30 yr fixed terms
  4. Reduced principal balance
  5. Partially or completely deferred past payments
  6. Credit preservation
  7. Home ownership preservation


What is needed from me to get the process started?

Please contact us immediately for a free consultation, though some banks have their own specific documents that need to be completed here is a list of standard documents needed to complete the package.

  1. Hardship Letter
  2. Last 2 years tax returns
  3. Paystubs and last 2 years w-2’s or a 6 month Profit and Loss Statement(self employed)
  4. Financial Statement
  5. Authorization to Release Information