Short Sale FAQ

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Santa Rosa Short Sale Explained

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A short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor.  This negotiation is all done through communication with a bank's Loss mitigation department.  Santa Rosa Short Sale Info

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UPDATE: July 15, 2011

CALIFORNIA ASSOCIATION OF REALTORS® applauds Gov. Brown on signing SB 458 into law

LOS ANGELES (July 15) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds Gov. Jerry Brown on signing SB 458 (Corbett) into law.   SB 458 extends the protections of SB 931 (2010), to ensure that any lender that agrees to a short sale must accept the agreed upon short sale payment as payment in full of the outstanding balance of all loans.

Under previous law (SB 931 of 2010), a first mortgage holder could accept an agreed-upon short sale payment as full payment for the outstanding balance of the loan, but unfortunately, the rule did not apply to junior lien holders. SB 458 extends the protections of SB 931 to junior liens.

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The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt.  In such instances, the lender would have the right to approve or disapprove of a proposed sale.

Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable.  In 99% of all cases it is not a settlement-in-full.  A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents still remain getting their profit.  And no regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance.  These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure.  Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing.

For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Time Line and Process

Additionally, a short sale is typically faster and less expensive than a foreclosure.  In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.  It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Call and I will sit down with you to explain the process and options. 707.974.8970

The IRS is now working with Short Sellers - Check New Laws

* We suggest you consult a tax advisor or attorney first.