Some facts for buyers and sellers about Short Sales in Illinois

What is a short sale?

A short sale is when a homeowner is "short" -when the amount owed on his or her mortgage is higher than the current market value. It is one method of disposing of your home without having the lender foreclose for lack of mortgage payments. For example, you bought a home for $350,000 and obtained a 95% loan. Now, 2 years later, the conditions in the market are dictating a $280,000 sales price and you've lost a job, or cannot afford to continue with the monthly mortgage payments. Obviously, your in a terrible situation.

A short sales is an agreement with the lender that the will allow you to sell the property for less than the mortgage. The cost of foreclosure is a huge burden to a lender and involves a great deal of time in Illinois. The lender will consider many factors: how much loss the lender will suffer, the hardship of the homeowner, if a modification of the loan will keep the status quo.

When does a Short Sale occur?

Smart qustion! A short sale occurs when a negotiation is entered into with the homeowner's mortgage company (or companies) to accept less that the full balance of the loan at closing. A buyer makes an offer, the offer is accepted by the owner, and if the mortgage company allows the property will be "sold short" of the total value of the mortgage.

Are there homeowners qualifications to preform a short sale?

Financial hardship: There is a situation causing the homeowner to have trouble affording their mortgage. Examples could be: death of a spouse, unemployment, illness, divorce.

Monthly income shortfall: A lender will want to see that you cannot afford or soon will not be able to afford the existing mortgage to the bank. The lender may recommend a modification of the terms of your loan if it fits their standards in underwriting.

Insolvency: The lender will want to see that you do not have the significant liquid assets that would allow you to pay down your mortgage. Full financial disclosure from the homeowner is required.

This is a complicated process that taxes the expertise of experianced professionals. I hold the CDPE, Certified distressed property expert designation, and  can assist. I believe I have the resources to help "clear the fog" by having you research your options with other professionals. I believe it is critical to enlist an experianced attorney in short sales to negotiate in your interest as well as talking with your tax accountant.

If you have any questions or feel you may qualify for a short sale, please contact me for a free consultation. Understanding your options now could mean all the difference in the world. I'm trying to help by solving the foreclosure crisis one homeowner at a time is what I'm aiming to do.