WHAT IS A SHORT SALE? A short sale is when a mortgage lender agrees to accept less than the amount it is owed and release its lien against a property in order to enable the property to be sold.
WILL A SHORT SALE STOP A FORECLOSURE? No, but sometimes a lender will postpone a foreclosure pending review of a short sale submittal. A postponement is within the sole discretion of the lender.
WILL MY SECURITY CLEARANCE BE AFFECTED? Possibly, it is advised that you speak to your human resources department to determine whether a short sale will have an adverse effect on your clearance.
WILL MY CREDIT BE IMPAIRED? Yes, short sales are reported to the credit bureaus and will likely result in a reduced credit score. Requests can be made to the lender to report the short sale transaction in such a fashion so as to minimize the negative effect on your credit report. Of course, it is possible that other remedies (such as foreclosure) that a lender may elect in the event you can not pay your mortgage may have a more substantial, negative impact on your credit score.
WILL THERE BE TAX CONSEQUENCES? In most instances the debt forgiven in the short sale of a primary residence is not taxable. Where a property is not a primary residence, or if the debt forgiven exceeds Two Million Dollars (One Million if married filing separately), forgiven debt may be taxable. We refer you to the IRS Internet site for a summary of general guidelines regarding this issue. We are not tax advisors and it is advised that you consult with an accountant or other tax professional to help you with this issue if you have further questions.
WILL I OWE ANYTHING AFTER A SHORT SALE? Possibly, in negotiating a short sale we will request that your lender waive any deficiency for unsatisfied debt that will remain after your property sale. If the lender does not agree it may seek to recover the deficiency for three to twelve years after the sale. Waiving a deficiency is completely within the lenders discretion and we can not guarantee what position your lender will take or that we will be able to successfully negotiate a complete release of liability on your behalf.
WHAT HAPPENS IF I DECLARE BANKRUPTCY? Once bankruptcy is filed there is an automatic stay that halts collection action against you. If you declare bankruptcy while we are assisting you with a short sale we will either suspend our representation or terminate representation due to the automatic stay. We will lift the suspension or re-enter representation if the bankruptcy is dismissed or discharged, the bankruptcy trustee abandons its interest in the property or the bankruptcy issues an order allowing the sale of the property.
DOES A SHORT SALE TAKE LONGER THAN A TRADITIONAL SALE? In almost every instance the answer is yes. The transaction may take anywhere from thirty days to over a year to complete. The final transaction must be negotiated with many different parties such as servicer’s, investors and insurance companies all with varying degrees of responsiveness. Patience of all parties to the transaction is absolutely necessary.