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| Whom do I contact for Customer Service questions? |
You can reach The Short Sale Service Customer Care via email at Customer.Care@TheShortSaleService.com, or via phone at 404-446-1310.
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| Whom do I contact if I want to talk about a Short Sale Candidate to determine if it is a Short Sale Candidate Worth Pursuing? |
You can reach The Short Sale Service Candidate Evaluation Team via email at Candidate.Evaluation@TheShortSaleService.com, or via phone at 404-446-1305.
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| Does The Short Sale Service negotiate or handle Forbearances or Modifications? |
Yes, we will negotiate a Forbearance or Modification at your request and you will pay an Approval Success Fee for each loan we negotiate. For example, if you ask us to get a Forbearance on a 1st mortgage and a Short Sale on the 2nd. When we succeed, you will pay two Approval Success Fees.
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| Does The Short Sale Service negotiate IRS liens? |
Yes and No. We will attempt to have an IRS lien removed or released from the Property. When we succeed you will pay an Approval Success Fee. However, we will not negotiate the liability nor will we dispute the validity of an IRS lien. These are negotiations that should be handled by your Seller’s tax attorney, not us. However, if nobody disputes the validity or amount of the lien, we will attempt to get it removed.
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| Does The Short Sale Service negotiate Short Sales for mobile homes? |
If the mobile home is attached to the land (realty), then yes, it is treated just like any other Short Sale.
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| Does the Short Sale Service require that an investor “have the deed” to a property prior to working on the Short Sale? |
No. The Short Sale Service does not require that Key Holders submit a copy of the Deed taken from a Seller at the time the deal is signed as part of their Short Sale Service Order.
For many years practice among real estate investors was to obtain title to the property at the beginning of the process. There are advantages to “taking the Deed” in the context of a Short Sale as is the best proof that the Seller is “cooperative and available” and has “exhausted all other options” before attempting the Short Sale. The reasoning was that if a Seller signs the Deed, then they have tried everything else and they are most likely on our side and cheering for us.
However, recent legislation in a few states may add complexity (or in some cases, potential liability to a purchaser) from taking the Deed in a pre-foreclosure situation. We therefore do not require that a Key Holder provide evidence that they have the Deed.
If you chose to do a Short Sale without getting the Deed from a Seller, Key Holders should be careful to make sure they get confirmation of their Seller’s cooperation and commitment to the deal some other way. In other words, you need to have confidence that your Seller will stick it out and stick with you.
In practice, we never believed that having or not having the deed would affect the ultimate success of your transaction. We believe that Short Sale deals are only successful when a true win-win –win is reached and with the Seller’s cooperation and enthusiastic support. Therefore, whether you have the Deed or not will not make a difference provided you are working with a Seller whom you trust and who is cheering for you.
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| But what if someone steals my Deal? |
Well, nobody can steal your Deal unless your Seller turns on you and gives the Deed to someone else. If this happens then you certainly do not have a Cooperative and Available Seller! Since we know we will not succeed without a Cooperative and Available Seller, then at least we know it now and we can stop work and not waste any more time. Your true protection of your Candidate is whether you have been honest with your Seller, developed rapport, and found someone who is on our team. Sellers who pray for you won’t cheat on you.
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| Can the Seller stay in the house while we are working a Short Sale? |
Yes, but…
Remember your Exit Strategy is to sell the house – so, can you sell the house with the Seller there? Does your Seller have nice furniture that will help sell the house?
Or, is your Seller a slob with their entire life crashing, along with all their life’s possessions, down around them – in this house?
If so, the Seller’s presence may actually help us with the BPO/Appraisal. But after the BPO, you probably want them out. Because as soon as we get the Short Sale approved, you’ll need to close and implement your Exit Strategy quickly.
Will your Seller be cooperative and move quickly when you say so?
The Seller is leaving one way or another so they might as well leave now.
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| What is a Deficiency? |
A deficiency is the difference between the Full Payoff and the Short Sale Payoff. This is the amount that the Lender is not getting back from the sale of the house. In approving a Short Sale, the Lender may refuse to satisfy the deficiency (charge off the debt and make it disappear). In this case your Seller still owes the difference between their original payoff and the Short Sale amount.
Your Sellers may suddenly get uncooperative when they realize that they are still on the hook for a whole bunch of money. They are most likely better off than if the house went to foreclosure. This is why managing expectations early on is so important! (Step 2 above.) This is the purpose of the What is a Short Sale? form.
Remember, if the debt equals or exceeds the value of the property (and it probably does if you are talking about a Short Sale), then a deficiency WILL RESULT no matter what happens (Short Sale or no Short Sale – whether they go with your offer or not). If it sells at foreclosure, there will be a deficiency. If the Lender takes it back REO and sells it through an agent, then there will be a deficiency. You are not creating a deficiency by doing a Short Sale – your Seller created the inevitability of a deficiency when they signed a note for more than the property was worth. All you can do is offer to try to help them out of the mess they created.
Going with a Short Sale gives a Seller the best chance of eliminating the deficiency because we always ask for a full release and satisfaction of the debt as part of a Short Sale negotiation. We do not always get it, but most of the time the entire debt is satisfied by the Lender in consideration of the Short Sale, resulting in NO DEFICIENCY.
Most importantly, the ability to negotiate for a full satisfaction does not exist under any of their other options: they cannot negotiate for a satisfaction if it goes to foreclosure! GOING WITH YOUR SHORT SALE ATTEMPT IS THEIR BEST CHANCE TO AVOID A DEFICIENCY! Although it should be noted that some jurisdictions do have laws that would prevent a Lender from pursuing a deficiency after a foreclosure where it is purchased at the sale.
If asked, clearly explain the possibility of a deficiency at the beginning of the process (when you are getting their paperwork) and give them the choice – “will you be okay if I get the lien released from the property, but not fully satisfy the debt?” If they say NO, then so do I – Next! But if you present it properly, then they will not say no because they will not want to limit their options for success at this point in the process. The key is to manage their expectations and explain everything to them at the beginning.
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| Is the Seller going to get hit with a big tax bill or a 1099 if you do a Short Sale? |
The Mortgage Forgiveness Act of 2007 was signed into law on 12-20-07 and is now official effectively getting rid of the question "will I be taxed on the Short Sale".
Prior to this action, forgiven mortgage debt due to foreclosure, short sale, or deed in lieu of foreclosure, was potentially taxable income to the borrower. This was the subject of much media attention and led to many questions and concerns from Sellers wondering whether or not they were going to get “hit with taxes” on the Short Sale.
The new law, however, temporarily waives these taxes for debts forgiven (as high as 35%) from the beginning of 2007 to the end of 2009.
This will effectively put an end to the question from Sellers . . . will I be taxed on the Short Sale discount. The definitive answer (at least until the end of 2009) is NO!
For more information about the 2007 Act, a detailed summary, and full text copy click here.
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| What if my Seller is in Bankruptcy? |
Since a Bankruptcy prevents debt collection activity, and foreclosure is a collection activity, and a Short Sale is an alternative to foreclosure, most Lenders will not discuss a Short Sale if the property is in Bankruptcy. We will not even get past the gatekeepers.
If your Seller is in Bankruptcy, explain what you can try to do for them when they are out of Bankruptcy and then wait until the Bankruptcy is lifted (either by petition from the Lender or when your Seller voluntarily dismisses).
You can start getting your paperwork together and submit your Short Sale Service Order to The Short Sale Service, but we probably will not get anywhere until the Bankruptcy is released.
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| Which Lenders are Giving the Best Discounts? |
While Lenders do go into and out of phases of being easier to work with and easier to get good discounts from, trying to identify which lenders to work with is not a valuable use of your time. There are so many variables that go into whether or not a Lender will grant a Short Sale that an investor is not well served trying to master these ever changing variables Lender by Lender. Just because a particular Lender does not approve your Short Sale this month does not mean that it won’t approve it next month. Keep your focus on what makes a good Short Sale Candidate as discussed in the materials and on structuring profitable deals and leave the guess work as to what Lenders might be “in the mood” this month to Seminar hallway gossip – it just does not matter.
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| What if the same Lender has both the 1st and 2nd mortgages? |
You can analyze the deal using the existence of the 2nd as your argument for a big discount. However, you are not likely to be successful reinstating the first and paying off the second if they are both held by the same Lender.
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| DISCLOSURE: The answers to these “Frequently Asked Questions” and other information on this site are presented for information purposes only. The individual facts and circumstances might cause the answers in your particular circumstances to be different. You should consult the advice of a licensed attorney in your jurisdiction for answers to your specific situation. Nothing contained in these answers or elsewhere on this website shall be construed as legal advice. |
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Frequently Asked Questions
