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Bazinet Realty
Linda G. Bazinet
Broker/Owner
47 Durfee Road
Dudley, MA 01571



Phone: 508-943-0667
Cell Phone: 508-864-2483
Email: Linda@BazinetRealty.com


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ABOUT SHORT SALES



NEED HELP WITH A SHORT SALE OR FORECLOSURE?

CERTIFIED LOSS MITIGATION SPECIALIST!

Are you falling behind in your mortgage payments?

Do you find yourself owing more than your home will sell for?

Have you analyzed the benefits of Short Sale vs. Foreclosure?

When trying to decide what the best decision is, you need
EXPERIENCED and KNOWLEDGEABLE professional on your side!

Pay No Commission! • Pay No Closing Costs!
• Pay No Attorney Fees!

Save Your Credit!

100% Confidential Consultation Free!

It’s not too late, you have options!

ACT NOW – Call Bazinet Realty Today!


SHORT SALE DEFINED

The term “short sale” refers to a specific type of pre-foreclosure transaction in which the owner of the property sells the property to a third party for an amount that is insufficient to pay off all the entitities having a lien on title to the property. In a short sale, the owner negotiates with some or all of the various lien holders to accept less than the full amount they are owned in exchange for a release of the lien. Short sales are often confused with REO sales, which are post-foreclosure sales and involve the lender as owner of the property.


SHORT SALE VS. FORECLOSURE


Credit Implications

One of the benefits of a short sale is that the owner’s credit report is impacted less negatively than it is by a foreclosure. The lender will likely report the short sale as a “pre-foreclosure in redemption,” which does not reduce a credit score as significantly as a foreclosure. Some lenders may not report the short sale at all, simply choosing to report the loan as paid. The benefit of short sales from a credit reporting standpoint can be a strong incentive to the owner to persevere in completing the short sale process.

Lender Can Pursue Short Sale and Foreclosure Simultaneously

It is extremely import to keep in mind that the lender will often proceed with a foreclosure action even as it negotiates towards a short sale. While it may seem that the lender ought to wait until the short sale is complete before it pursues the foreclosure option, the lender is obligated to its investors to minimize its loss, and the lender will want to position itself to be able to foreclose without delay if the short sale falls through for any reason. Be sure to monitor the lender’s foreclosure activity to avoid unpleasant surprises and deadlines.

Why a Lender Opts for Short Sale

There are a number of reasons a lender might prefer a short sale to a foreclosure. Most of them relate to the expenses of a foreclosure both in time and in monetary costs. If a lender can avaoid having to process a foreclosure action (which, in Massachusetts, takes approximately three to five months and can cost a lender $5,000) and further avoid taking a property into its REO portfolio, the lender would be happy to do so as long as the short sale option does not have an adverse impact on its investors or its ability to recover from an insurer.

Why a Lender Opts for Foreclosure

As mentioned above, a lender’s primary drive in dealing with delinquent properties is limitation of expense and protection of its investors. A lender may prefer to foreclose on a property rather than process a short sale for several reasons. First, the lender may have a different valuation of the property and may think that it will receive more via foreclosure than from the proceeds of the short sale. Second, the terms of the short sale may not fit within the guidelines of acceptable loss established by the lender’s investors or insurers. Third, the lender may think that the seller is unlikely to complete the short sale in a timely manner, and may prefer to complete its foreclosure rather than delay in reliance on a potential future transaction.


SHORT SALE PACKAGE

*The following is a general list of the short sale package Lenders will require and vary from Lender to Lender.

Authorization to Release Loan Information Form – In order for your listing broker to communicate with the lender or lenders an Authorization to Release Loan

Information will be required and is signed by ALL the people on the note.

Hardship Letter – This is a letter that informs the bank why you can not pay your loan.

Bank statements – The last 2 months of bank statements (minimum).

Paycheck Stubs – The last 2 months of paycheck stubs (minimum).

Tax Returns – The last 2 years of completed tax returns (W-2, 1099c, etc.)

Listing Contract – Most lenders want the property listed with an real estate broker.

Offer to Purchase – When an offer is received, the completed & signed Offer to Purchase the property.

HUD-1 – An estimated HUD-1 statement sheet showing the net to the lender.


CREDIT IMPLICATIONS

One of the benefits of a short sale is that the owner’s credit report is impacted less negatively than it is by a foreclosure. The lender will likely report the short sale as a “pre-foreclosure in redemption,” which does not reduce a credit score as significantly as a foreclosure. Some lenders may not report the short sale at all, simply choosing to report the loan as paid. The benefit of short sales from a credit reporting standpoint can be a strong incentive to the owner to persevere in completing the short sale process.


LENDER CAN PURSUE SHORT SALE AND FORECLOSURE SIMULTANEOUSLY

It is extremely import to keep in mind that the lender will often proceed with a foreclosure action even as it negotiates towards a short sale. While it may seem that the lender ought to wait until the short sale is complete before it pursues the foreclosure option, the lender is obligated to its investors to minimize its loss, and the lender will want to position itself to be able to foreclose without delay if the short sale falls through for any reason. Be sure to monitor the lender’s foreclosure activity to avoid unpleasant surprises and deadlines.


WHY A LENDER OPTS FOR A SHORT SALE

There are a number of reasons a lender might prefer a short sale to a foreclosure. Most of them relate to the expenses of a foreclosure both in time and in monetary costs. If a lender can avoid having to process a foreclosure action (which, in Massachusetts, takes approximately three to five months and can cost a lender $5,000) and further avoid taking a property into its REO portfolio, the lender would be happy to do so as long as the short sale option does not have an adverse impact on its investors or its ability to recover from an insurer.


WHY A LENDER OPTS FOR A FORECLOSURE

As mentioned above, a lender’s primary drive in dealing with delinquent properties is limitation of expense and protection of its investors. A lender may prefer to foreclose on a property rather than process a short sale for several reasons. First, the lender may have a different valuation of the property and may think that it will receive more via foreclosure than from the proceeds of the short sale. Second, the terms of the short sale may not fit within the guidelines of acceptable loss established by the lender’s investors or insurers. Third, the lender may think that the seller is unlikely to complete the short sale in a timely manner, and may prefer to complete its foreclosure rather than delay in reliance on a potential future transaction.


HELP FOR HOMEOWNERS FACING FORECLOSURE

When a homeowner first buys their home foreclosure is probably the furthest thing from their mind. Today’s economy has forced millions of homeowners into a potential foreclosure situation.

There are many reasons why people go into foreclosure. Some of those reasons include:

Job loss
Unexpected death, illness or medical emergency
Adjustable rate mortgage increase
Unexpected home maintenance expense

There are ways to avoid foreclosure. The best way to avoid foreclosure is to prevent the filing of a Notice of Default. If a home owner knows they are unable to pay their mortgage they should immediately call their lender.

Lenders do not want to foreclose. They may be willing to work with the home owner but it is important that the home owner doesn’t ignore contact from the lender.

The lender may propose several options:

Forbearance
Lenders may agree to a repayment plan before taking legal action



Debt Forgiveness
Very rarely the lender might give you a break and waive your obligation.



Repayment plan
The lender may agree to spread the payments out over a longer loan term.



Modification
In some cases, the lender may agree to freeze the interest rate of an adjustable rate loan or extend the amortization period.



Refinance
Adding payments to an existing loan balance may be an option if the homeowner has sufficient equity and meet the lender’s guidelines for refinance.



Partial Claim
Certain government loans may contain provisions that allow the homeowner to apply for another loan to pay back missed payments.

Preventing the Notice of Default filing is the best way to prevent foreclosure. If none of the above options have worked there are still some options a homeowner can leverage. Once the Notice of Default is filed, the homeowner only has a small time frame to reinstate the loan by bringing the payments current and pay the costs of filing the foreclosure.

If you are unable to make up the payments you still have a few options:

Sell your home

If you have equity in your home a quick sale is probably the best option at this point. Your home will need the best exposure and marketing to achieve the quickest sale possible. A full marketing plan and the proper price positioning should get your home sold in time to avoid foreclosure.

Attempt a short sale

If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale is when you sell your home for less than what the amount owed. A short sale will affect your credit rating but not as bad as a foreclosure. A short sale is negotiated with the lender.

Deed in lieu

The homeowner deeds the property back to the lender by giving the lender a properly prepared and notarized deed, and the lender forgives the mortgage.
For more information on how to prevent foreclosure visit the U.S. Department of Housing and Urban Development site to Avoiding Foreclosure.
http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure





   
Committed to Professionalism in Real Estate.
Massachusetts Licensed Real Estate Brokerage located in Dudley, Massachusetts


Servicing: Auburn, Barre, Brimfield, Brookfield, Charlton, Douglas, Dudley, East Brookfield, Grafton, Hardwick, Holden, Holland, Leicester, Mendon, Millbury, Monson, New Braintree, North Brookfield, Northbridge, Oakham, Oxford, Palmer, Paxton, Royalston, Rutland, Shrewsbury, Southbridge, Spencer, Sturbridge, Sturbridge-Fiskdale, Sutton, Uxbridge, Wales, Ware, Warren, Webster, West Boylston, West Brookfield, Worcester