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SHORT SALE AND FORECLOSURE


Here are a few important differences between Short Sale and Foreclosure that you wish to consider:

When you hire a Real Estate agent he / she has a feudatory responsibility to protect you but when the lender hires the same agent now the agent has a feudatory responsibility to protect the lender on the sale of your home.  


On a short sale transaction you are very much in control of the transaction just like a normal real estate transaction and everything needs to be signed off by you which are not true once you go into foreclosures.  
As to credit reporting the good news is there is no category in credit bureau with words for Short Sale however in credit bureau there is a category with words for Foreclosures so if you do a short sale it will not appear as a short sale in your credit report. Perhaps the more important idea is in many categories of Short Sale you could come back to the market as little as 2 years to get a home loan and take advantage of low prices however under foreclosures it could be as long as 7 to 10 years which you may lose the cheap housing market in many zip codes.  
As to the losses that lender takes on your house. The Judgments are often negotiated between the seller and the short sale bank. In some cases, such as California, if the home is your personal residence and was financed through purchase money, there is no deficiency judgment at all however the same bank will be in a position to be unwilling to negotiate deficiency judgment with the homeowner after a foreclosure.

ONE THING IS FULL SURE TO GET A SHORT SALE APPROVE REQUIRES A WHOLE TEAM HAVE EXPERTLY IN MORTGAGE VS. REAL ESTATE.  WHY? BECAUSE EVERYTHING THAT YOU NEED TO GET APPROVE FROM YOUR BANKS REQUIRES THE UNDERSTANDING OF YOUR MORTGAGE, NOTES, DEEDS AND MORTGAGE UNDERWRITING UNDERSTANDING WHICH IS WHY YOUR BANK ASKS FOR INCOME DOCUMENTS.


YOUR LENDER SEEKS TO KNOW; YOUR INCOMES, EXPENSES, D.T.I RATIOS, AN ACCEPTABLE HARDSHIP. A FILE STRUCTURED PROPERLY MAY ALLOW YOUR BANK TO GIVE YOU A PAID AN AGREE VS. REPORTING OUTSTANDING BALANCE ON YOUR CREDIT, IN NUT SHELL WE HAVE NEGOTIATED OVER $200 MILLION OF MORTGAGE NOTES WITH BANKS PLUS OUR TEAM OF FULL TIME UNDERWRITERS ARE EXPERT NEGOTIATING WITH BANKS IN ALL 50 STATES, WEATHER IT IS MODIFICATION, SHORT SALE OR GOVERNMENT LOANS.
San Francisco Chronicle said,” It's important to hire an agent who is willing to put time and effort into both marketing your property and dealing with lenders.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/10/24/REAJ1A1IFR.DTLT

HIS IS WHY BBB HAS GIVEN OUR COMPANY AS THE ONLY COMPANY IN NORTHERN CALIFORNIA THE ACCREDIT RATING WHEN IT COMES TO REAL ESTATE MORTGAGE MODIFICATIONS. YOU MAY CHECK IT YOUR SELF.


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Government Loans - Mortgage Modification - Short Sales
 

 
 



By Elizabeth Weintraub, About.com Guide to Home Buying / Selling


Should You Choose a Short Sale Over a Foreclosure?

Differences between a short sale and foreclosure should be weighed carefully before making a decision.
Differences between a short sale and foreclosure should be weighed carefully before making a decision.

Short Sale Benefits
Here are a few benefits for doing a short sale that may not have occurred to you:

  • You are in control of the sale, not the bank.
  • You may sleep better at night knowing who is buying your home.
  • You will spare yourself the social stigma of the "F" word, foreclosure.
  • Contrary to popular belief, you can be current on your payments and still effect a short sale.
  • Your home sale will be handled like any other home sale.

Buying Again After a Short Sale
If your payments have never fallen behind 30 days late and the lender does not require that you pay back the loan, Fannie Mae guidelines may allow you to buy another home immediately. The wait for an FHA loan is 3 years.
If your payments are in arrears yet a short sale is granted by your lender, you may qualify to buy another home with a Fannie-Mae backed mortgage within two years, regardless of whether the home is your primary residence.

Buying Again After a Foreclosure
With certain restrictions, you may be eligible to buy another home in 5 years if the home was your primary residence. Without restrictions, the wait is 7 years.  If you are an investor and do not occupy the home, the wait to buy with a Fannie Mae insured loan is 7 years.

Affects on Credit After a Short Sale
A short sale is not a derogatory mark on your credit because credit bureaus do not show the word "short sale" on your credit report. It may say "pay as agreed" or "paid as less than agreed," among other categories. Some clients have reported negative FICO score drops from 50 points to 130 points. The point drop is typically due to being in default that is behind on your payments.

Affects on Credit After a Foreclosure:
A number of sources have reported FICO score drops from 200 to 400 points after a foreclosure. Generally this credit score will remain on your credit report as a public record for 10 years.

Credit Reports After a Short Sale
All lenders report short sales differently and some do not report them to the credit bureaus at all.

Credit Reports After a Foreclosure
If a prospective employer runs a credit check on you, your job application may be denied if you have a foreclosure on your record.

Deficiency Judgments After a Short Sale
Judgments are often negotiated between the seller and the short sale bank. In some cases, such as California, if the home is your personal residence and was financed through purchase money, there is no deficiency judgment.

Deficiency Judgments After a Foreclosure
Banks are unwilling to negotiate deficiency judgments with the homeowner after a foreclosure. In California, for example, according to the California Association of REALTORS, a deficiency judgment may be filed regarding a hard-money loan if the lender forecloses under a judicial foreclosure versus a trustee sale or if the second loan is a hard money loan and the sale takes place as a trustee's sale.

Loan Application Questions After a Short Sale
Loan applications do not ask questions about a short sale. You may report that you sold your home.

Loan Application Questions After a Foreclosure
You are required to answer the question: "Have you ever had a property foreclosed upon or given a deed-in-lieu thereof in the past 7 years." If the bank sees you have had a foreclosure, your loan most likely will be denied. If you lie, you may be subject to investigation by the FBI for mortgage fraud.

Length of Time to Move After a Short Sale
If you've had a foreclosure notice filed, you may be able to postpone that action while the bank considers your short sale. The wait for short sale approval can be from 2 to 3 months, or longer.

Length of Time to Move After a Foreclosure
Unless prior arrangements have been made, the bank may want you to immediately vacate the property and can commence eviction proceedings.

Taxation After a Short Sale
A personal residence is exempt from mortgage debt relief until the end of 2012 on a federal level. Some states will still tax you unless you qualify for an exemption. An investor is not exempt from mortgage debt relief, subject to certain conditions.

Taxation After a Foreclosure
Same as with a short sale. Except some lenders immediately send out 1099s, even if the owner is exempt.
In closing, always obtain legal and tax advice before making a decision between a short sale or a foreclosure.

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YOU COULD SIMPLY AVOID THE TAX LIABILITY BY MODIFYING YOUR MORTGAGE