Frequently Asked Questions
What is a short sale?
A homeowner is "short" when the amount owed on his/her property is higher than the current market value of that property. 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. It is a better alternative to foreclosure for both the lender and the borrower because the lender avoids the exorbitant fees that a foreclosure entails, and the borrower lessens the negative impact on his/her credit score, compared to the effect of foreclosure on credit score.
What are the advantages of a Short Sale?
For you, the homeowner, advantages include avoidance of a foreclosure on your credit history. Having a foreclosure on your credit report is second only to bankruptcy and will substantially reduce your credit score. You may also have to wait several years to qualify for a mortgage again.
The impact of a short sale on your credit is much less severe than with a foreclosure. And, if buying a home is something you’d like to do in the future, if you successfully complete a short sale, in most cases, you may again qualify for a mortgage in as little as 18 months.
A short sale is typically faster and less expensive than a foreclosure.
What will it cost me?
In short, nothing. You will never be charged for our services. If you complete a short sale, we negotiate our fees directly with your lender. If you do not complete a short sale, you are not charged for our consultation or guidance. Furthermore, the cost of selling your home (Escrow, Title, transfer fees, and other closing costs) are paid for you by your lender.
May I continue to live in my home?
Yes. You don't need to move out of your home until your short sale is fully approved and escrow is closed. You will know when it is time to move out and we will give you ample time, usually 30 days.
Do I qualify for a short sale?
The qualifications for a short sale include any or all of the following:
There is a situation causing you to have trouble affording your mortgage.
Monthly Income Shortfall
A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.
Why would my lender agree to a Short Sale?
Whether a lender chooses to foreclose or agrees to a short sale, the lender is taking a loss. In many instances, lenders take less of a loss with a short sale, and can cut its losses faster then what is required to foreclose. Foreclosure is usually a last resort for everybody. Remember, a lender is in the business of making loans, not owning and managing properties.
Why shouldn’t I negotiate with my lender directly?
The property needs to be listed and sold to a third party. You'll need professional assistance to handle the sale. You only get one chance to negotiate out of foreclosure through a short sale process and it’s imperative to have experience and expertise on your side to get the best result. Just as you shouldn’t go to court without an experienced attorney, you shouldn't try to navigate the intricate process of a short sale without an experienced short sale expert on your side.
How long will the short sale process take?
Generally it takes from 3 to 6 months, sometimes longer. Think about all the money you are saving by not making any more payments during this time!
How will a short sale effect my credit?
Here is what "Ask Experian" says about short sales' credit impact:
The term "short sell" doesn't actually appear on a credit report. It is simply the phrase used to describe negotiating with your lender to sell the house for less than is owed on the mortgage and for the lender to then consider the mortgage closed. As a result of such an agreement, the account status may be reported as paid, but will likely also indicate that the lender did not receive the full amount owed. In effect, that means the debt has been settled for less than actually owed. If a homeowner loses their home to foreclosure, their credit score may drop 200-300 points. With a short sale, only late payments on the mortgage will show. When the short sale is complete, the mortgage is normally reported as "paid as agreed" or "paid as negotiated". The credit hit can be as low as 50 points.
Glossary of Terms
Repayment of a mortgage loan through monthly installments of principal and interest; the monthly payment amount is based on a schedule that will allow you to own your home at the end of a specific time period (for example, 15 or 30 years).
A legal alternative that allows the borrower to clear any debt obligations by restructuring the payment terms. A bankruptcy stops the foreclosure process until the bankruptcy process is completed or the court allows the lender to resume the foreclosure.
Occurs when the borrower does not meet its legal obligations according to the loan terms.
Deed in Lieu
Voluntary conveyance of title in exchange for a discharge of debt. The house must be free of other liens and must have clear title. In simple terms, the borrower agrees to transfer title of the property to the lender, who accepts the property in exchange for the total debt.
DTI (Debt-to-income ratio)
A comparison of gross income to housing and non-housing expenses.
Fair market value
The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Under a forbearance agreement, the lender agrees to stop the foreclosure process and determines payment terms that, at a certain time, will bring the borrower current.
A legal claim on a property by a lender or other entity (called the lien holder) against the property owner that owes the money.
Lis Pendens (LIS):
A publicly recorded notice of a pending lawsuit against a property owner that may affect the ownership of a property. This process is required in a few states to begin the foreclosure process if a borrower is in default.
A transaction in which a lender agrees to modify any or some of the terms of the mortgage. This is a process where an existing note is modified, but not canceled. Changes may include: extending the term of the loan, changing the monthly payments, changing the interest rate, reduction of reduction of principal, etc .
Principal Balance Reduction
Instance where the bank forgives a portion of your principal balance as part of a loan modification. The mortgage payment due for this note is based off the new loan amount. Only applicable in heavily depreciated areas.
Occurs when the property owner pays off the amount in default to bring the loan payments current in order to stop the foreclosure process and return to the original terms of the loan.
REO (Real Estate Owned)
A class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction.
A property sale negotiated with a mortgage company in which a lender takes less than the total amount due.
Areas We Cover
• Los Angeles County
• San Fernando Valley
• Conejo Valley
• Simi Valley
• Ventura County
• Antelope Valley
• San Gabriel Valley
• San Bernardino Valley
• Orange County
Lenders & Banks
These are just a few of the many lenders we work with.