Corpus Christi Short Sale Information

Financial distress is an unfortunate situation, most often caused by circumstances beyond a homeowner’s control. CORE Coastal Realty understands these situations, and we are committed to assisting with your concerns – extending the utmost confidentiality, dignity and respect. 

A “Short Sale” is an agreement where a mortgage lender consents to a payoff that is lower than the balance owed on the current loan. A short sale occurs when a buyer closes on a property, and the property is then ‘sold short’ of the total value of the mortgage. 

A Short Sale agreement can be an excellent solution for financially distressed homeowners who need to sell, yet who owe more on their homes than the home is valued on the open market. In the past, it was rare for a lender to accept a Short Sale. However, due primarily to government influence over corporate policy, many lenders are becoming more agreeable to Short Sale transactions. Lenders have come to realize that formal Foreclosure proceedings are very costly, can be more time consuming, and typically lead to even deeper financial losses than Short Sales. 

In most instances, homeowners considering a Short Sale must meet a specific set of criteria in order to qualify: A homeowner must be behind in mortgage payments (or soon to be delinquent), provide evidence of economic hardship, and have little to no equity.

  • Economic Hardship – A situation causing the owner to become delinquent on a mortgage.
  • Insolvency – Lenders will require proof that the owner does not have significant assets that could be sold / liquidated to lower the mortgage debt.

These criteria seem simple enough to explain to a lender; however, this is often a complicated process that requires the expertise of experienced professionals. The execution of a Short Sale is anything but typical. Closing fees, sales commissions, service fees, condo/HOA liens, back taxes and past due utilities may need to be considered, and CORE Coastal Realty can assist in negotiating relief on your behalf. 

For further information, please visit: IRS Publication – Mortgage Forgiveness Debt Relief Act

 

Short Sale – Frequently Asked Questions:

What do I need to do first?

First and foremost, don’t wait! Get help as soon as you can. CORE Coastal Realty will begin actively working to resolve any issues as soon as possible, greatly increasing your chances of avoiding the loss of your home through Foreclosure. If possible, contact your lender to explain your financial situation BEFORE letters of delinquency are sent. This act of initial contact will help your lender understand your financial condition, and it will provide an open channel of communication to find a proper “Work Out” resolution, or modification to your loan.

 

Will a Short Sale stop formal Foreclosure proceedings?

A Short Sale process will not stop a Foreclosure. However, a lender may postpone the Foreclosure sale, pending a review of a Short Sale submission. This decision is entirely dependent upon the cooperation of the mortgage lender.

 

What are the implications to my credit score?

Assuming a successful Short Sale, your mortgage will be reported to the credit bureau as ‘paid’ or ‘negotiated’. Credit scores will be affected, yet not as substantially as a formal default (Foreclosure). Typical Short Sale credit impact will last for 12 to 18 months, whereas a Foreclosure can be a credit burden for 3 to 7 years (or more).

 

Are there any Tax Consequences to consider?

There may be specific federal or state tax consequences associated with a Short Sale and debt forgiveness. A certified accountant should be consulted to assist with any potential tax implications. We can recommend accounting professionals that can review these concerns with you. Please visit the IRS Publication – Mortgage Forgiveness Debt Relief Act link posted above.

 

Will I owe anything after a Short Sale?

CORE Coastal Realty will negotiate on your behalf, and strive to initiate terms in your best interest. We will request that your lender waive any right to pursue a deficiency judgment against you for any unsatisfied debt related to the Short Sale. Waiving the deficiency is ultimately within the lender’s discretion, and we cannot guarantee a complete release of liability. A real estate attorney should be consulted with prior to accepting a final Short Sale agreement with your lender.

 

What is the typical time-frame of a Short Sale?

Short Sale transactions can easily span three to six months, but some extend in excess of a year. The negotiation, approval, and finalization of a Short Sale is an intricate process. Patients will be required by all parties involved.

 

What if Bankruptcy is declared?

If bankruptcy is declared, an automatic stay halts collection activities from lenders. If Short Sale proceedings are in place, CORE Coastal Realty will cease any activity until the bankruptcy is dismissed, discharged, the assigned trustee abandons its interest in the property, or when the court issues an order allowing the sale of the property.