Orlando Short Sale Process: Get Rid of Mortgage Issues for Good

The Orlando Short Sale Process for Sellers Step by Step

I’ve been an Orlando short sale realtor since 2004 and although there have been changes in rules and regulations, etc., the short sale process for sellers has pretty much remained the same. Going through the short sale process can be intimidating, to say the least. However, by getting a handle on it from the start you’ll have a big advantage.

Why Consider A Short Sale?

A short sale is when a homeowner sells their property for an amount that is less than what they owe on their mortgage. A short sale is often the last resort for people who have exhausted all other options to save their homes and avoid foreclosure.

If you want to keep your home try a loan modification first. Speak with your lender about your situation. You may qualify for a loan modification and avoid having to sell it at all. A loan modification is exactly what it sounds like… it’s when a lender adjusts the terms of your mortgage making the payments more affordable so that you can keep your home.

The Home Affordable Modification Program aka [HAMP] is a program by the US Department of Housing and Urban Development and is a good place to start. Homeowners who qualify for HAMP are put on a 3 month trial period. Those who it through will be approved at the new payment avoiding foreclosure.

If a loan modification is just not an option pursuing a short sale would be the next step. When you speak to your lender about doing a short sale, do it sooner than later and don’t wait until you’ve already missed several mortgage payments. A short sale means that you are attempting to sell your home for less than what you owe on your mortgage which means your lender needs to sign off on it.

What’s A Short Sale Package?

Lenders have a set of rules or qualifications that need to be met before getting approved for a short sale. Although they may vary a bit, all lenders pretty much have the same requirements for their short sale packet.

The lender will require the homeowner to submit any documentation which proves they are going through a financial hardship and truly cannot continue to make the mortgage payments. These documents will include bank statements, pay stubs, financial statements, asset disclosures, and of course a hardship letter. A hardship letter is a letter written by the homeowner explaining in detail why they can no longer continue making their mortgage payment.

Hiring a Short Sale Agent

Speak with an Orlando short sale expert. A short sale can only be completed by a real estate agent so make sure you hire an agent with a lot of experience in the short sale arena to represent you. The best way to find a short sale agent in your area is to do a Google search using terms like “Orlando short sale expert” or “short sale realtor” and interview at least three of the agents that appear on the first page.

Once you’ve chosen the agent that will represent you, they will then put the short sale package together for the bank as well as determine a listing price that the lender agrees with.

Listing your property as a short sale is a next step in the process. The lender requires the home to be listed on the MLS at fair market value.

Once there’s an interested buyer, the offer should be submitted to the lender. Once the lender has reviewed the offer, there will almost certainly be some further negotiating between your short sale agent and the potential buyer before a price is agreed upon by all parties.


Short Sales are anything but Short

It’s important to be aware that short sales are anything but short. It can take several months for a short sale to be approved by the lender.

Make sure your agent finds out from the lender if there are any “cash for keys” incentives available to you. This is when the lender gives the seller money back at the closing to help with relocation costs. If you were able to qualify for HAFA for instance, you will receive $3,000 upon closing the deal.

If all goes well and the lender approves the buyer, the deal closes and all is good with the world. You move out [hopefully with a few thousand in your pocket] and the buyer moves in.


When can I Buy another Home?

The next question you have is probably… “how long before I can buy another home?”…

There is no black and white answer to this question. A short sale will surely affect your credit but not nearly as bad as a foreclosure will. Also, the IRS may treat the forgiven debt as taxable income. This means you may end up owing some money to Uncle Sam.

There’s no denying that short sales are a great option for a homeowner facing foreclosure. Firstly, It helps the seller avoid foreclosure and eliminate their debt. Also, the seller can stay in the home without making payments while the process is happening.

We’ve tracked some of our clients after a completed short sale. Homeowners can usually get a conventional loan after four years. Again, this is still much better than having a foreclosure on your record. A foreclosure can prevent you from getting another mortgage for up to seven years.

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Orlando Short Sales… Know The Rules!

Don’t let the name fool you, Orlando short sales take a long time! The reason being is that a short sale means that the bank loses money so you can’t blame them for not being in a rush. This can however be helpful to the homeowner by allowing them time to get their house sold and avoiding foreclosure. If a lender approves a short sale on a home, it means that they are allowing the homeowner to sell their home for less than what’s owed on the mortgage.

Recently, the United States Treasury Department changed the rules to make the short sale process easier and more efficient. Usually, the short sale process will drag on for several months and even up to a year in some cases. And even then there was no guarantee that the lender would agree to a short sale. That’s why there are so few Orlando short-sale realtors willing to specialize in this area of real estate.

Some short-sale agents remain skeptical and think that nothing will change. Orlando short sale specialist Jenny Zamora, Broker at Orlando Realty Consultants “I will be the first to shout from the rooftops if the short sale process becomes faster than what it is”.

These are some of the changes that are being put in place:

  • Potential buyers must submit a pre-approval letter from a lender together with their offer on the home.
  • Lenders have to either approve or deny a short sale offer within ten business days.
  • To protect the homeowner from being forced out, the short sale lender must give a 45 day closing period unless the seller agrees to a lesser amount of time.
  • If someone buys a house via short sale, they cannot sell it for at least 90 days. This scenario is fine for someone planning to live in the home but it presents a problem for investors looking to do a quick flip.
  • Orlando short sales done through the HAFA program [Home Affordable Alternatives Program] can’t be sold to a friend or relative or business partner of the seller.
  • A maximum of $3,000 can go to holders of junior liens to release a lien on their property
  • A lender may not foreclose while the house is being marketed for sale during the short sale process.
  • Lenders may no longer charge fees to borrowers who wish to pursue a short sale instead of a foreclosure.
  • Lenders may no longer lower realtor commissions after an offer has been received.

Jenny Zamora, Orlando Realtor, and short sale specialist are overall happy with the changes although she is doubtful these changes will increase her already outstanding turnaround time of 30-45 days to complete a short sale.

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