Short selling is a very common practice today given the number of foreclosures. Basically it is the lender taking less than what a party owes on the mortgage. For example, let's say the borrower owes $200,000 and the lender agrees to accept $150,000 as payment.
Several things have just happened. One, the seller is out from under the house. Two, the seller just received phantom income of $50,000 approximately that he will have to report to the IRS. Three, his credit report will not reflect a foreclosure if indeed he was in foreclosure but it will reflect he was late. Four, the seller will generally not be able to get a home loan for at least 2 years following the short sale.
It is more involved but those are the basics. Each lender has different criteria they use before they will agree to a short sale. I happen to be working two at the moment, both with very large nationally known mortgage companies. There are people who are offering short sale courses on the Net ranging from $49 to $1597. Be wary. I have returned two of them for a full refund because they are woefully lacking in specific how to information. The reason I bought them was to see what others in the field were saying and to decide if I wanted to offer a course.
How did I get so smart? I used to be a real estate broker and mortgage banker and am familiar with this technique. I had toyed with the idea of offering my own course but I'm not sure I want to be a hand holder as this business is intensive, time consuming and, at times, stressful. But you can make more in a month than most people make all year and I do have the blueprint and may be willing to work with a few people.
I have something none of the others have - I have the telephone numbers of the right department to call to get the deal rolling. Regardless, if anyone has any questions feel free to write me at
foreclosure at
reno dot
com. I will be happy to talk with you.
Tom
So why would a lender agree to this? The only case I can see is they have given up hope of being able to collect on a loan and this is a cheaper alternative than selling the debt to a collections company.
However, the way you describe it, it doesn't sound like that is the case at all. intentionally
You have one answer, they have given up on being able to collect on the loan. As a side note - real estate lenders never use debt collection companies because the lender has the ultimate power of foreclosure. No debt collector can give them what they already have.
A non producing asset is a very costly asset. Given today's rules, a house can easily go from an asset to a liability for the lender. Lenders can only have so much in dollar volume on their books as real estate owned before they are barred by law from making any more loans. The consequences of REOs as they are called are loss of jobs, downsizing and outright going out of business.
A short sale gives them some cash and allows them to not have a non performing asset on the boks. While the lender owns the property, they have to pay the property taxes plus insure it. Also, if someone is injured on the property, they are liable. They are also responsible to adhere to homeowner agreements and covenants plus any other rules and regulations applicable to that housing tract.
The list goes on but the above are probably the main reasons a lender agrees to a short sale. By the way, even if they list the house w/a realtor, none of the above ceases. The clock keeps moving forward for them just like for you and I.
Now, go out and do a short sale or two and help the lenders.
