Short Sale Information
VINCE VOLPE & LEANN ENGSTLER
CERTIFIED DISTRESSED PROPERTY EXPERTS
Tucson short sales are when the homeowners owe more than what the home or Real Estate is worth and the lender or lenders, agree to accept less then what is owed, a short payoff. A Short Sale takes a knowledgeable Realtor to get the transaction closed. We are experienced Tucson Realtors, with the knowledge required to close Tucson Metro area short sales for sellers as well as buyers who are buying homes in the Tucson Metro Area.
WHAT IS A FORECLOSURE?
The legal process used by a lien holder (lender) to enforce its lien against real property given by a Borrower as collateral (Deed of Trust). Foreclosure results in the transfer of title to a property to the lender or successful bidder at the foreclosure sale.
TYPES OF FORCLOSURE
NON-JUDICIAL FORECLOSURE (TRUSTEE'S SALE):
A foreclosure done pursuant to the power of sale conferred upon the trustee under a Deed of Trust. No court involvement. Arizona Statutes govern the process.
JUDICIAL FORECLOSURE
A foreclosure done by filing a civil lawsuit against the borrower seeking a Sheriff's Sale on the property.
The loan must be a purchase money loan. (Qualified Loan) A loan given to pay for all or a portion of the purchase price of a Qualified Property. e.g: First Mortgage, Carry back loan and refinance, extension, or loan modification.
TYPES OF PROPERTIES COVERED BY NON-JUDICIAL FORSCLOSURE:A property that is: On 2.5 acres or less and limited to and actually utilized as single 1 or 2 family dwelling. A 2 family dwelling is, for example a duplex. Known as a "Qualified Property
ARE DEFICIENCY JUDGEMENTS PERMITTED IN ARIZONA?
Yes, a deficiency judgement may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount that the underlying mortgage secures. Lenders are prohibited by Arizona statute (33-729) from obtaining deficiency judgments in foreclosures where the land size is 2.5 acres or less and where the property was used as either a single one-family or single two-family dwelling.
The loan must be a purchase money loan. (Qualified Loan) A loan given to pay for all or a portion of the purchase price of a "Qualified Property". e.g: First Mortgage, Carry back loan and refinance, extension, or loan modification.
We are Tucson Realtors that have set up the following Short Sale information to help Tucson homeowners
understand the Short Sale process.
TUCSON SHORT SALE This is when you sell your home for less then what is owed to the lender. In most cases it is more advantages for the bank to allow the Short Sale rather than go through the cost of the foreclosure process. Another advantage of the Tucson short sales, you most likley will be able to purchase a new home in 2 years after the short sale with a Fannie Mae or Freddie Mac backed loan compared to 5 years with a foreclosure. Check to your current loan to see if Fannie Mae owns or Freddie Mac your loan at www.fanniemae.com/loanlookup or www.freddiemac.com/corporate. The homeowner does not pay the Tucson real estate agent's commission, the commission comes from the bank proceeds of the Tucson short sales. As Tucson Realtors we will work with your lender directly to negotiate the Tucson short sale on your behalf.
NOTHING. The lender will set a sale date during the foreclosure process to sell the Tucson homes at the Pima county steps which does not have a Tucson Realtor at this time. The lender needs to sell the home at the auction for what is owed on it. In the Tucson real estate market, most homes are upside down (mortgage is more than the value of the home). When the bank can not sell the Tucson home for what is owed on it, the homes goes back to the bank and becomes an REO (Real Estate Owned) Once it becomes an REO property the bank will list the home with a Tucson Realtor. The eviction process will be started and you will be given days to move out. A big factor is if you have a foreclosure on your credit you will have to wait 5 years before you can buy Tucson real Estate or a Tucson home through Fannie Mae or Freddie Mac backed loan.
LOAN MODIFICATION. This should be the first thing to do if you want to stay in your Tucson home and keep your Tucson real estate. The lender does not want the property back through a foreclosure of the Tucson real estate. If you have a financial hardship, health reason, loss of employment or decrease in income, the lender may try to work out a repayment plan, move past due amounts to the end of the loan or spread out the missed payments over time. Please call your lender and ask for the loan workout or loss mitigation department. The will inform you of which documents they will require. This can be a long process for the lender to review your file, but it could keep you in your home. We highly recommend this especially if you want to save your Tucson home and continue to own Tucson real estate.
DEED IN-LIEU OF FORECLOSURE. This is an alternative to foreclosure of Tucson homes where the home owner signs over the deed to the lender. There are 4 main conditions for a lender to consider a deed-in-lieu. 1. Foreclosure is imminent and unavoidable. 2. The borrower is unable to sell the property. 3. There should be no other liens, or attachments on the property. 4. the property needs to be left in broom clean condition.
BANKRUPTCY. This option can liquidate debts and/or allow more time. Chapter 7 (liquidation) to completely settle personal debt_Chapter 13 (Wage earner Plan) payments are made toward a plan to pay off debts in 3-5 years.-Chapter 11 (Business Reorganization) a business debt solution. Please contact a qualified attorney to find out what your options are.
Regardless of what choice you make, your credit is going to take a hit. Below are frequently asked questions before someone does a short sale to avoid foreclosure.
IS THERE TAX LIABILITY? If the lender agrees to the Tucson short sale that is with a Tucson Realtor, the lender will issue a you a 1099 for the short difference. See the Mortgage Forgiveness Debt Relief Act of 2007. The Mortgage Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on the principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with foreclosure, qualifies for relief. The provision applies to debt forgiven in calendar years 2007 through 2012. Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion does not apply if the discharge is due to services performed for the lender or any reason not directly related to a decline in the home's value or taxpayer;s financial condition. Please contact a qualified tax professional.
DO I HAVE TO PAY FOR A TUCSON REALTOR'S SERVICES? No. we do not charge the home owner for listing the Tucson homes, completing the Tucson short sales or marketing the home. The lender pay for the the Tucson Realtor's commission and closing costs out of the lenders proceeds from the sale of the distressed home.
CAN I SELL THE TUCSON HOME TO A RELATIVE OR BUY IT MYSELF AT THE NEW PRICE. No. The Tucson short sale must be an arms length transaction. The buyer, seller and the Tucson Realtor will be required to sign a form that certifies that the transaction is arms length. Once you sell your home through the Tucson short sale you have to move out.
CAN I GET PROCEEDS FROM THE SALE? No. No funds what so ever will go to the seller of the Tucson Real Estate in a Tucson short sale
CONTACT US TO DISCUSS YOUR OPTIONS FURTHER. IF YOU THINK A TUCSON SHORT SALE MAY BE IN YOUR FUTURE. WE CAN HELP YOU SELL THE TUCSON HOME AND TUCSON REAL ESTATE ON A SHORT SALE OR EVEN GIVE YOU SOME TIPS TO TRY TO SAVE THE TUCSON HOME.
