Statistics on Short Sales? Are There Any? Part 1
I am regularly asked questions like:
“In your experience, what does my Lender usually do in a Short Sale?”
“Are they going to let me do a Short Sale?”
“How long will it take?”
“Am I going to have to pay money in the Short Sale?”
“If I am going to have to pay, how much do they require?”
“Are they going to give me a full release? If not, then what?”
“Is my short sale going to close?”
The answer is the same to all of these types of questions. “It depends”. You might ask why such a vague and uncommitted answer? I have found that after assisting Sellers through Short Sale transactions over the past five plus years, providing any other answer would be inaccurate and could be misleading.
Every Short Sale transaction could involve at least the Lender, the Investor, the Servicer, the Primary Mortgage Insurance Company (PMI), and management committees; all who play an active role in analyzing the information submitted for review. Ultimately, once the review process is completed and there is a decision rendered, it remains subject to final review by the committee, group or department charged with issuing final approval.
There are two types of Short Sales: Governmental and Traditional. A Governmental Short Sale is dictated by the directives issued under the Making Home Affordable program and is exclusively for loans on primary residences or homestead properties. Traditional Short Sales are any transaction denied eligibility under the Governmental program or transactions on investment properties.
While the Governmental program does include specific criteria, it does not guarantee or ensure the information submitted for review will be analyzed in accordance with the specified criteria. There have been many times where a transaction met the criteria, was denied approval for the Governmental program, and we have had to request reconsideration.
There are no specific criteria with regard to Traditional Short Sales. Every single file is based upon the Borrower(s)’ and transaction’s unique specific set of circumstances. In conjunction with the lack of specified criteria, there are many variables taken into consideration during the review process which are undisclosed and nearly impossible to determine.
Every Short Sale transaction includes one or more loans. Each loan includes a Mortgage and Promissory Note. The best result of a Short Sale is receiving an approval for each loan agreeing to satisfy the Mortgage and satisfy and cancel the Promissory Note. Most importantly is receiving a full waiver of rights to pursue the deficiency (remaining outstanding indebtedness after short sale is completed per the approval terms), which results in the issuance of a 1099C.
This Blog was written by Annette Giardina Haber, Esquire, of the Dellutri Law Group, P.A. Ms. Haber runs the Firm’s Real Estate Department and concentrates her practice as a real estate transaction attorney. She represents clients through loss mitigation options, drafts contracts, title insurance and handles residential and commercial closings.