Short Sale Assistance

Avoid Foreclosure and Save Your Credit

If you are facing foreclosure, we may be able to assist you with a “Short Sale.” The Short Sale is a process where we negotiate with your bank to accept less than what you currently owe, saving you tens of thousands of dollars and more importantly, your ability to purchase a a home in the future.

Rules and regulations involving short sales are always changing, we specialize in short sales so we know how to best help you and how to use the benefits of recent legislation to minimize your exposure and make the process as smooth as possible.

If you are facing foreclosure or are having a hard time making your mortgage payments.

Let us start negotiating with your mortgage company to relieve you of some of the stress involved. We can help you with:

• Selling your home quickly. We have a group of buyers looking for homes just like yours.
• We can reduce the impact on your credit, preserving your ability to purchase a home in the future.
• A foreclosure will impact your credit for 10 years but a sucessful short sale will in general, only impact your credit for the next 3 years.
• We’ll handle all of those stressful mortgage collection calls

We’ll be respectful of your privacy and the walk you through the entire process so that you feel comfortable with us and our results. Call us at (512) 743-7820 to have brief discussion about your situation and how we can help. We are not a national company, but rather a local company here in the Austin, Texas area. Austin Home Rescue was founded to assist homeowners during these troubled financial times.

A Brief Explanation

When housing prices in many parts of the country were booming a couple of years ago, there wasn’t much national attention given to short sales. But with the current subprime debacle and increasing mortgage delinquencies, many people are wondering if the short sale process is a way to avoid foreclosure. Though Austin hasn’t suffered the same fate as many areas around the country, there has been a recent increase in short sale and foreclosure activity in the Austin Tx area.

Basically, the definition of the short sale process is when the lender of a property allows the property to be sold for less than the amount due on the mortgage loan.

The obvious benefit to the short sale process is that it allows the seller to avoid the credit report damage associated with a foreclosure. A foreclosure can stay on your credit report for up to 7 years and can take an emotional and financial toll on you and your family.

Why Choose Us?

If you want to be a doctor, you go to medical school.  If you want to practice law, you go to law school.  Realtors who want to become specialized in a particular niche of real estate advance their skills by acquiring certain designations and certifications, beyond their normal licensing requirements.  With foreclosures on the rise and the increasing demand for Realtors to be well educated and trained in various aspects of pre-foreclosure related topics, it is imperative that Realtors become proficient in these niche disciplines.  Foreclosures continue to skyrocket and homeowners who may have fallen behind on their payments need to know where to turn to find out more about what options might be available when facing foreclosure.  On a traditional listing, a homeowner is usually hopeful to get the price they’re asking.  In a distressed situation, where the homeowner has a legitimate hardship, is behind on mortgage payments, and owes more on their mortgage than the property is worth, they typically must sell quickly to avoid foreclosure.  Realtors must be properly prepared in knowing what to do if a situation like this arises.

As a Certified Default Resolution Specialist – CDRS  and a Short Sale Foreclosure Resource - SFR , Realtors go through a comprehensive training program to learn how to assist in facilitating the decision-making process with a homeowner, to identify the best strategy for a homeowner who may not qualify for a loan modification or special forbearance.  Some might say that it is the homeowner’s responsibility to determine which option or alternative may be best for them, given their unique situation, but most homeowners truly don’t know what to do in a situation like this.  Reports show that, while some homeowners qualify and are taking advantage of the pre-foreclosure options made available through the Making Home Affordable Program and other government initiatives, too many homeowners are still too afraid to call their lender and find out what other options might be available to them.  In many cases, the first person a homeowner calls when they’re in trouble with their mortgage is someone they probably know and trust, who many times is their Realtor.  Therefore, it is of utmost importance that the Realtor knows what to do, what to say, and how to determine the best strategy in moving forward.  Getting the right pre-foreclosure education and training is essential to a Realtor’s success in today’s market.

Did You Know?

FHA short sales are the easiest to process.  The reason FHA short sales are so easy is because there is a systematized process defined by HUD (Department of Housing and Urban Development) that absolutely has to be followed when doing the short sale.  The lenders don’t have free reign to do anything outside of what is already defined by HUD.  Here are a few things you need to know that give you and edge regarding FHA short sales.

First, FHA requires at least one of the owners to be occupying the home at the time of short sale.  This requirement can be waived due to severe hardship that causes the seller to vacate.  In addition, the seller MUST be at least 31 days delinquent on the loan.

The seller MUST be approved into the pre-foreclosure program before the lender can consider any offers.  This approval is evidenced when the Seller receves HUD form 90045 from the loss mitigation department at the lending institution.  This form is titled “Acceptance into the Pre-Foreclosure Sale Program.”  This form will reveal the property’s appraised value!

The minimum NET PROCEEDS (not purchase price) to the FHA 1st mortgage is based on “As-Is” Appraised Value AND Length of Time From Date of Approval:

     Less than 30 days = 88%       30-60 days = 86%          61+ days = 84%

So, the net proceeds that the lender needs to receive at closing MUST be no less than the percentages listed above of the appraised value, which is referenced on HUD Form 90045.  This means that you MUST ensure that everything in the transaction that will be paid (i.e. Realtor commissions, closing costs, liens, judgments, seller incentives, prorated taxed, etc.) has to be accounted for before reaching the 84-88% threshold.  The lenders will not take a penny less!

Once accepted into the pre-foreclosure sale program, HUD gives the seller 90 days to sell their home under the terms of the agreement.  The lender is required to postpone all foreclosure proceedings 90 days past the date of approval in the meantime.

GOOD NEWS for Sellers.  FHA will provide a seller incentive of $1,000 to the seller if they come under contract and close within the 90-day period.  That’s right, a gift to the seller for not going to foreclosure!  This is reduced to $750 if the property comes under contract in the 90-day period, but doesn’t close until after that period.

FHA will allow up to $2500 as a payoff to a 2nd mortgage or other junior liens affecting the property.  However, the seller will then be required to forfeit the $1000 incentive to the 2nd lender/junior liens.  The incentive is applied first before applying the additional $1,500.

There are some closing costs that the lender will not pay on behalf of the seller at closing.  They will not pay for a home warranty, HOA delinquent dues, HOA transfer fees or the water/sewer escrow.  The incentive noted above could be used for these costs.

HUD ABSOLUTELY WILL NOT allow any seller paid buyer closing costs if the buyer is receiving conventional financing.  If the Buyer is obtaining FHA financing, then FHA will allow a MAX of 1% seller paid buyer closing costs.  The buyer cannot “bid up” the purchase price to cover seller concessions on an FHA short sale.  HUD simply will NOT allow it.  The incentive noted above CAN be used for seller concessions.  So, any buyer that needs seller concessions over $1,000 will not be able to purchase your home via the short sale.

As you can see, an FHA short sale requires a different strategy than working with a VA or conventional short sale.  Most Realtors do not even know about this FHA incentive and the way they work!

Considering the complexity of the short sale process, make sure that you discuss your situation with an experienced and certified Short Sale Realtor.  

Download the reports below to learn more about your options.  To discuss the possibility of a short sale, call us direct at (512) 743-7820. All information will be kept strictly confidential.