Hawaii Real Estate - How to do a Short Sale on Maui or the Big Island
How To Do a Short Sale?
Having a hard time making you mortgage payments?
These days, you hear plenty of stories about families thatare losing their homes. Most people don’t want to face up to the reality, untilforeclosure sets in, and that can harm your credit, or worse give you a hugetax burden. You can contact your bank and renegotiate the length of themortgage or interest rate, which may lower your payment amount. If you arereally having a problem with your payments and you have good credit you maywant to do a short sale.
Your first step is to hire a Realtor.
List your property for sale with a reputable real estatecompany and send a brief letter to all mortgage holders, giving them permissionto speak with your Realtor. Otherwise, privacy laws will prevent them fromtalking to your agent.
What do I do, if there’s more than 1 lender?
If there are a first and second mortgage or a home equityline of credit, you may have to talk to more than one lender to get approvalfor a short sale. The presence oftwo lenders makes a short sale more complicated since it’s often the lenderholding the second mortgage that has to absorb most of the loss.
Who should I contact at the bank?
Be sure you call the bank’s loss mitigation department,which will be the group to decide whether, or not to accept a short sale. Finding the decision maker is often oneof the biggest hurdles in doing a short sale.
What information will the bank need to decide whether toaccept a short sale?
The short sale submission package should include W-2 formsfrom employers (or a letter explaining that you are unemployed), bankstatements, two years of tax returns, and other documents outlining income anddebt obligations. In addition, as a short seller you should submit a “hardship letter,”explaining the circumstances that make it impossible for you to pay the fullamount of the loan
What financial or credit liabilities will I have as aresult of a short sale?
Many lenders ask you to sign a promissory note for all orpart of the difference between the proceeds of the short sale and the debtobligation as a condition to a short sale. In such cases, the note giveslenders the right to sue a seller and attach other assets if the note is notpaid when due. Having a portion of a loan forgiven may adversely affect aseller’s credit.
What tax liabilities will a seller have as a result of ashort sale?
One often over looked aspect of short sales is that a sellermust count any amount forgiven by the lender as income and pay taxes on thatincome, even if no actual money was received. The IRS requires lenders tosubmit a Form 1099 stating the forgiven amount. Sellers who meet the InternalRevenue Service definition of insolvency will not have to pay taxes on theforgiven amount.
Home ownership is your right and please remember that youhave friends in the real estate industry that may be able to assist you inthese tough times.
For moreinformation contact:
CertifiedResidential Specialist
Howard Dinits(R)S
RE/MAX Maui
877-434-6487 or via e-mailHoward@BigIslandRealEstate.com
Please go to my sites for more information
http://www.EasyMauiRealEstate.com
http://www.BigIslandRealEstate.com