. . . on the decision to foreclose or short sale that is.  You must seek counsel of an experienced real estate professional, a qualified tax professional and/or an attorney before making any decisions as to whether to foreclose or attempt a short sale.  Both can have pros, cons, consequences and benefits.  Believe it or not, sometimes foreclosure is the right answer.  Often a short sale is the best solution as it enables you to negotiate up front with the lender for any future recourse.

1. Logistics - there are distinct differences as to how your occupancy of your home will be handled.  In a short sale, you will have to move when the home is sold.  In a foreclosure you may be able to stay months before the sheriff comes knocking on your door during the final steps of an eviction.  Do you know when you’ll have to move?  What is your strategy to secure housing if your credit will be destroyed?
2. Paperwork - in a foreclosure, folks just walk away.  In a short sale, there is a lot of paperwork involved.  Do you know what you need to to assemble in order to ask a lender to accept a short sale?
3. Hardship - did you know that there are many reasons people are in the situations they’re in now with their mortgages?  Does it qualify YOU for a short sale?
4. Scams - did you know that scammers are good at what they do?  Did you know that smart people are signing over the deeds to their homes without realizing it does not relieve them from the obligations they have with the bank?
5. Assets - do you own other assets besides the home you’re in trouble with? Is there a way to protect your other assets (other homes, boats, cars, etc) in either a foreclosure or a short sale?
6. Retirement – most homeowners also have money in their retirement accounts.  Can you still do a short sale with monies in retirement accounts?
7. Privacy – did you know that once a Notice of Default is filed, it is public record? Did you know the Notices of Trustee sales are public notices too?  How can you avoid it getting to that point and maintain privacy in your financial matters?
8. Taxes – did you know that just walking away (foreclosure) may not alleviate your tax liability? Did you know that only some homeowners will feel the effects of the Mortgage Debt Relief Act of 2007?  Can you qualify for Federal tax relief? What about the State?
9. Recourse – did you know that only your purchase money loan(s) is considered a “non-recourse” loan in California? Did you know a “recourse” loan means that the lender can file for a judgement against you if you do not pay your obligation?  Will you be protected against recourse and monetary judgements if you foreclose, or do a short sale?  Are your loans recourse or non-recourse?  Is there a reason to let one of your loans foreclose (i.e. your second) and not the other? (YES there is!)
10. Fraud – did you do a “N-I-N-J-A” loan (No Income, No Job, No Assets), or an all stated income loan with little/no documentation?  Did you fib? At all? Did you bolster your income or assets to get the house? Did you know that is fraud?  And that there is a window of opportunity for the bank to go after you whether you foreclose or short sale if they suspect fraud?  Are you protecting yourself?  What is YOUR best course of action?  

Oh oops, one more:

11.  Bankruptcy – sometimes, for some people, bankruptcy is a solution.  Have you talked to an attorney about the benefits and consequences of filing for Bankruptcy protection?

Realize that for all of these top ten eleven reasons above there may be ten others SPECIFIC to your situation.  NEVER is ignoring the problem the right answer.  The consequences of either a short sale or foreclosure can be significant and can haunt you for years. 

If you need the answers to these, or other questions, call the professional short sale team of Catherine Myers and Terry Osburn of Alain Pinel Realtors in Walnut Creek.  Call 925-683-2125 or 925-381-9944. Or CONTACT US by navigating to our contact page on our site here (see above).

Serving Contra Costa County, and some areas of Alameda and Solano County. 

(Walnut Creek, Danville, San Ramon, Alamo, Lafayette, Orinda, Moraga, Pleasant Hill, Martinez, Concord, Clayton, Bay Point, Pittsburg, Antioch, Oakley, Brentwood, Benicia, Vallejo, Dublin, Pleasanton, Livermore)

If you’re interested in working with your bank to accept a short sale, there are many documents you’ll need to gather.  Most banks have a loss mitigation department who’s job it is to resolve problems associated with a defaulted loan.  Most often you’ll be working with a loss mitigation officer charged to help the bank minimize the loss due to a loan in default.  Though each bank has its own guidelines, many banks will not consider a short sale until you actually are late on your loan, and have received an offer on your property. Its vital to have the short sale package of required documents ready so that you can work thru the process quickly.  Most buyers do not want to wait weeks or months to navigate a short sale, so to facilitate a successful sale, get your paperwork in order.  Most commonly, the following items are required:

• Listing contract
• Sales contract
• Hardship letter
• 2 years W-2’s or tax returns
• 2 months pay stubs
• 2 months bank statements
• Recent statements for 401k, retirement, investment accounts
• Financial statement listing current liabilities, assets and income information

At times a lender or loss mitigation department may request additional information and documentation in order to verify the change in the borrowers financial situation and hardship.  Important to note that some of the requested documention may lead to re-verification of your financial status at the time of your loan origination.  And remember, even though you do everything your lender asks, provide all the documentation and obtain an offer, it is still solely the bank’s decision as to whether to accept the short sale terms.  Some find that no matter what they do, foreclosure is inevitable. But that is why, more than ever, it’s vital to have the right real estate professional on your side.

Coming soon . . .

Alternatives to foreclosure (refinancing, deed in lieu, bankruptcy, etc.)
How your REALTOR will work with your bank
Anatomy of a proper hardship letter, what do you write?
Ramifications of short sales and foreclosures (tax and legal considerations)
Property Marketing for a short sale
Short Sale Processing
What happens in a foreclosure
. . . and much more.

Your Contra Costa and Bay Area Short Sale Resource.  Call today for a confidential consultation and frank discussion of your options to avoid foreclosure.

Catherine Myers, REALTOR
Alain Pinel Realtors, Walnut Creek, CA
www.DiabloValley.net

Terry Osburn, BROKER ASSOCIATE
Alain Pinel Realtors, Walnut Creek, CA
www.TerryOsburn.com