Before the process can begin there must be an agreement between both lender and borrower. It’s an agreement between two parties that involves many complexities. The most valuable aspect of the transaction for the homeowner is the avoidance of foreclosure.
The two parties first agree to the short sale, and then they must deal with all of the various and complex aspects of the bank short sale process. For example, they must decide how much of and the manner of the debt to be forgiven, the price of the home, payment of fees, and then deal with the purchase agreement. It is absolutely vital at every stage to have the assistance of a professional. The short sale process is not to be done on your own!
The homeowner will need to complete a document known as the hardship letter to verify how they ended up in the short sale process. The statements in this document will be verified by various financial documents provided by the homeowner. It is in this manner that the lender will verify how the borrower ended up being so dangerously close to foreclosure.
In the end, the short sale process is done for the bank to be able to keep its losses at a bare minimum. For this reason the lender must have the home appraised by real estate professionals in order to to assess the fair market value. It is all about the bank trying to recover as much of its money as possible.
If the home is sold in accordance with the agreement – then the money will be used to settle the debt. The bank is not obligated to wait any longer than they agreed to wait in the contract. They can legally proceed with foreclosure if it is not sold by the date agreed to in the contract. These issues will be clearly stated in the agreement.
Just because you go through the short sale process, your credit doesn’t have to be destroyed. There are many aspects to a short sale and many borrowers have missed deadlines relating to financial issues directly affecting their credit rating. Their credit was damaged as a result. Some end up with damaged credit due to having other areas of financial responsibility involved in the short sale process. Damaged credit is not a definitive result of a bank short sale. This is one of the more prominent reasons that we have to acquire experts and then follow their advice.
Our goal is to pass through the short sale process and come out with the least amount of damage possible. If we do it correctly, we could come out with no property taxes, credit rating in tact, all of our fees paid, and neither bankruptcy nor foreclosure! This will be our reward – we may lose our home, but we’ll be in a great position to buy another.
Perry Zohanson has been assisting homeowners facing the short sale process for years. Be sure to read his bank short sale blog for free tips on how to make the short sale process work for you.
From: http://vacationhousesusa.com/2009/09/18/the-short-sale-process-my-safety-from-foreclosure/
]]>Help Your Sellers Prepare for an FHA Appraisal Inspection
•The appraiser must check representative smoke detectors. Please ask sellers to be sure they are working and accessible.
•The appraiser must have access to the attic , via scuttle and/or drop stairs, as well as access to crawl spaces. Please ask sellers to clear the access to the scuttle. If the scuttle door is located in a closet, please clear the closet contents. Please leave the scuttle door open. The appraiser will not break the seal of a sealed scuttle, nor clear the area of personal belongings due to issues of liability. A return inspection will be required if these areas are not prepared.
•Please ask sellers to disengage computer settings on automatic thermostats (set back type). The appraiser must check the operation on heating and cooling systems and will not want to alter the system settings.
•Garage doors must be tested for function and reverse function. If the reverse does not work, please ask sellers to repair or adjust or inform the appraiser of the problem to avoid damage to garage doors during the testing process.
•The appraiser must test representative electrical outlets and switches. Please ask sellers to make sure all have operable light bulbs. In a vacant house, utilities must be restored to the building. The appraiser must disclose whether utilities are on/off.
•For properties which include a well and/or septic, please ask sellers to indicate the location of the well head and/or septic drain field, if known.
•The appraiser must test windows for proper operation. If windows are painted shut, please ask sellers to free them and make sure they are operating properly. In addition, security bars must have inside safety release latches allowing ingress/egress in the event of an emergency.
•Homes built prior to 1978 which have peeling or flaking paint on any surface (exterior & interior) will be called for repair. If these areas are scraped, primed and painted prior to the appraisal, time and expense will be spared. At a minimum, exposed deficiencies must be sealed with paint.
•Special Note on Appliances: The Valuation Protocol (page D-26 of Appendix D, Handbook 4150.2) requires the appraiser to note the appliances that are present in the home at the time of inspection and whether the appliance is considered personal property or part of the real estate. The protocol further directs the appraiser to treat non-functioning appliances/equipment as deferred maintenance in the valuation process.
The manner in which an appliance is attached to the dwelling would determine whether or not an appliance should be considered part of the real estate. In some real estate markets, it may be typical and customary for certain appliances to convey with the real estate. In these situations, those appliances should be considered real estate and treated as such in the valuation of the property.
In some cases, such as that of REO properties, all or some of the appliances may be missing and there may be damage to the floor, wall or ceiling finish as a result of the removal. Depending upon the magnitude of the damage, the appraiser is expected to treat the damage to the home as deferred maintenance and reflect such in the conclusion of value. Missing appliances must be addressed by the appraiser in the valuation process, particularly when the comparable sales included a full complement of working appliances