Florida Short Sale Attorney

What is a short sale?

If you are dealing with threats of foreclosure, creditor harassment, or crippling debt, a short sale may be a good option for you. Unlike foreclosure, a short sale allows you as the owner to sell your own home and then give the proceeds to the lender. A foreclosure involves the bank or other creditor seizing your home without any thought to you. By definition, a short sale means that the amount the property is sold for will not be enough to cover the sum that is owed. However, the creditor will often forgive this deficiency as it means that they will get most of their money back.

A short sale can benefit both the debtor and the creditor. It involves less time, expense, and hassle to both parties. It gives the debtor a fresh start and it gives the lender a repayment that they may otherwise not have received. It also helps buyers and the housing market as they are able to purchase a home at a sometimes greatly reduced cost. More and more families in Florida are choosing the option of short sale. However, it is not the only way to be free from debt and there are pros and cons to consider.

Dos and Don'ts of Short Sales

In order to ensure that the short sale process goes smoothly, there are some dos and don'ts that could make all the difference in the outcome of your case. First of all, don't forget that there will be various closing costs in the sale of your property. Attorney fees, property taxes, delivery fees, notary fees, and more will need to be added in to the amount that you can give the creditor. Do remember that if you chose not to sell your home through a real estate agent, you will cut down on costs. Lastly don't forget that the IRS may become involved. They may treat the sale as income as they are a form of debt relief. In order to avoid these pitfalls and make the best decisions, having an experienced legal representative on your side could be an invaluable benefit.

WHAT IS A SHORT SALE?

A short sale occurs when a property sells for a price that is insufficient to pay back the loan(s) secured against it (or any other liens against the property, such as delinquent property taxes, Homeowners/Condominium Association fees, etc.) as well as standard sales closing costs. In such a case, in order to complete the sale, you, as a Seller, must either: (1) come to the closing with sufficient cash from other sources to cover these shortfalls; or, (2) your lender(s) must agree to forgive all or a portion of the amounts you are "short" or make other arrangements for repayment (such as execution of a promissory note). This second alternative is commonly known as a Short Sale. Your lender will generally not allow you to receive any proceeds or otherwise obtain any monetary benefit as part of a Short Sale.

WHAT OTHER OPTIONS MAY BE AVAILABLE OTHER THAN A SHORT SALE?

Depending upon your financial condition and other factors such as other liens against the property and available interest rates, you may be able to negotiate a modification of your loan(s), refinance, deed the property back to the lender(s) in lieu of foreclosure, or declare bankruptcy in lieu of attempting a Short Sale. You may also be eligible for government assisted refinancing options such as FHASecure (for more information call 1-800-225-5342) or visit www.hud.gov. Other options may also be available depending upon your individual circumstances and you should consult with legal, tax, credit or financial advisors to help you evaluate these options and determine whether any others may exist and be more appropriate for your circumstances.

WHAT IS THE PROCESS FOR GETTING A SHORT SALE APPROVED?

There is no universal set of rules or regulations that determine whether you are eligible for a Short Sale or whether your lender(s) will approve a Short Sale. Each lender is different and each has established their own criteria, which may or may not be favorable to you. Some lenders will not communicate with anyone but you regarding a possible Short Sale, and others may not discuss the possibility of a Short Sale unless you are in default, or until a contract offer is presented. The basic general steps in the Short Sale process after listing the property for sale are:

  • Proving Financial Hardship: You must typically prove to your lender(s) that you are experiencing financial hardship and will be unable to continue making loan payments. In some, but not all cases, you may already be in default of your payment obligations. Most lenders will require you to provide specific information such as a financial affidavit, tax returns, bank statements, and pay stubs in order to prove financial hardship.
  • Determining Property Value: Once you have proven a financial hardship, you must be able to demonstrate that the property is worth less than the total amount owed to your lender and any other lien holders. Frequently, your lender will require a Broker's Price Opinion (BPO) or Comparative Market Analysis (CMA) from a Realtor, and it may also order an appraisal of the property from a licensed appraiser of their choosing. In some cases, you may be responsible for this expense.
  • Finding a Buyer: A qualified buyer must submit an offer to purchase the property, which is then submitted to the lender for approval. Each lender with a mortgage or lien against the property must approve of the potential purchase to the extent that their loans will not be paid in full at closing. Many lenders will not even consider a Short Sale, review the property's value, or evaluate your financial hardship until a bona fide offer to purchase is received.
  • Final Approval: Once your lender acknowledges your inability to continue satisfying your payment obligations and the fact that the property is not worth as much as the loan(s) secured by the property, you or your representative must convince the appropriate decision makers at each lender that it is in their best interest to approve the Short Sale. Most lenders have a specific department that handles these requests which is commonly referred to as either the Loss Mitigation, Pre-foreclosure, or Loan Workout department.

HOW WILL I KNOW IF MY LENDER HAS APPROVED A SHORT SALE?

In all likelihood your request for a Short Sale will be subject to different levels of approval by your lender. At various times throughout the process, you (or your representative who is communicating with your lender) may be told or otherwise get the impression that your lender views your request favorably or believes that it will be approved. However, you should not assume that a Short Sale has received Final Approval unless and until you have written confirmation from the lender setting forth its approval and all of the specific terms of the compromise. Your lender will in all likelihood have the ability to withdraw its approval up until that time or perhaps later. If your Short Sale is approved, you should inform your Realtor immediately and the approval should be provided to the settlement agent so that they can prepare the appropriate documents needed for the closing of the transaction.

HOW LONG WILL IT TAKE TO GET A SHORT SALE APPROVED?

Every Short Sale situation is different, depending on your individual circumstances, the nature of the loan(s) and other liens against your property, and your lender's criteria and staffing. If your lender will consider a Short Sale prior to the submission of an offer to purchase, the process may take less time because you should be able to provide your lender with all of the required documentation in advance and the lender may order an appraisal of the property sooner. Even if your lender will not consider a Short Sale prior to submission of an offer, you should have all of your financial information (mortgage documents, bank statements, pay stubs, tax returns, etc.) organized and immediately available to avoid unnecessary delays. In the current market environment where Short Sale requests are occurring with much greater frequency, your lender may not be able to respond to your inquiry or evaluate your request as quickly as you would like. While some lenders are able to review and approve Short Sale requests quicker than others, many lenders take at least 3-4 weeks, if not longer. In addition, it is important to understand that there is no assurance that your lender will approve of your Short Sale request. You should begin to consider any and all other options available to you now in the event your request is denied.

Contact a Florida short sale lawyer today!

LeavenLaw has experience in every area of bankruptcy and foreclosure law. We have handled countless cases and know exactly how to protect the best interests of their clients. If you would like to speak with a Florida attorney from our team, please do not waste any time in contacting us. We will examine every aspect of your case in order to find the best solution for you.

For a free case evaluation, contact a Florida short sale lawyer from our team today. Do not wait to get the assistance you need to get a clean slate.