Ocean View Realty Help & News - Short Sales Facts and Myths

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Short Sales Facts and Myths

Written by Felix Carrillo, Attorney at Law

SHORT SALES 101 - "FACTS AND MYTHS"

Everyone is talking about Short Sales, but do you really know what is involved with a short sale? What do you need to know when working with a buyer or seller on a short sale? Who can you turn to for assistance with a short sale? Read on to have some of your questions answered... Let's start with the basics, what is a "Short Sale?" A Short Sale is the process by which the Lender agrees to accept less than what is owed under the mortgage and generally releases the borrower from further liability.

What are the general requirements for a short sale?

Default under the mortgage
Property listed for at least 3 months
Hardship of the borrower
Tax returns or financial statements for 2 or 3 years
Contract for Sale and Purchase with an arms length Buyer

What are the benefits of a short sale?

Debt forgiveness / no possibility of a deficiency judgement
Impact on your credit rating vs. foreclosure
Possible tax consequences - Mortgage Forgiveness Debt Relief Act of 2007

What are the potential pitfalls of a short sale?

Possible tax consequences on investment property or second home
Implication on loans involving mortgage fraud
Time requirements due to foreclosure proceedings
Sale must be to an arms length Buyer

Are there Foreclosure Defense Benefits?

A defense extends the process significantly
Stay in your property until you are evicted by the Lender
Allows sufficient time for the short sale process

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Editor's Note: While this article was written by Felix Carrillo, an Attorney licensed to practice in the State of Florida, this article should not be relied upon for specific legal advice. This article is intended for educational purposes only, in order that you may better understand the options available to you and your customers. As each real estate transaction or legal matter is different and every buyer’s or seller's immigration and taxation status is unique, you should advise your customers to seek the advice of competent legal counsel, versed in the applicable state and federal laws. Should your customer choose to use Felix Carrillo, please have them contact him directly through the Law Offices of Carrillo & Carrillo, PA.