Short Sales in Orlando Florida Series - Lesson 3 - The Lender Process

Feb. 21, 2010 - PRLog -- The Short Sale Process in Orlando Florida

Note: This article describes the short sale process in Florida.  Because the foreclosure and short sale process are closely connected, please be sure to understand your state foreclosure process and laws.  The short sale process will be slightly different based on the foreclosure process in your state.

The first step is to determine your hardship.  If you don't have a hardship and can make your current payments the lender may not consider a short sale.  A hardship can be anything.  A few examples are job loss, job relocation, divorce, loss of income, death, medical bills, care for a sick family member, property tax increase, insurance rate increase, adjustable rate mortgage (ARM) increase, or a combination of several hardships.  What is your hardship?

The second step is to answer this question.  Do you want to save or sell your home?  If you want to save your home then the short sale is not an option at this point.  To save your home you must immediately contact your lender to see if you qualify for a loan modification program.  The lender has incentive to keep you in the home because the foreclosure process can be time consuming and costly.  In most cases the lender will modify the terms of the loan by lowering the interest rate or extending the length of the loan.  Make sure you fully understand the terms of the program because many of the programs are short term and not permanent.  If interested in this option, please contact us about our Attorney based loan modification option.  Loan Modifications  Do you want to save or sell your home?

If you answered "sell" your home, it is important to be committed and not wavering back and forth.  Of course if your situation changes then you may reconsider but if your situation does not improve be committed to sell your house because your lender may accelerate the foreclosure process.

Step 3 is immediately contact your lender to discuss the short sale option.  If you are not behind on payments they may not even entertain this option with you.  Some lenders have told homeowners when you are behind on payments then call us.  The key here is to put the lender on notice you want to short sale the property.  The lender will provide you a list of items to submit referred to as a Short Sale Package and specific instructions to follow.

Step 4 is to submit the short sale package.  The short sale package is a list of items required by the loss mitigation department to review your case.  This includes 3 recent and consecutive pay stubs, 3 recent and consecutive bank statements, previous two IRS tax returns, financial statement, hardship letter, and a copy of drivers license.  Once you collect all these documents you will fax them to the lender.  The key is to submit a complete package all at once.  Be sure to put your case number at the top of each document you submit to ensure all your documents are filed properly by the lender.  You will need to follow their instructions exactly to have any success.  For most folks this can emotionally be a challenge because you are working with a company that wants to foreclose on you.  So it is critical you remain patient and calm because the short sale process is lengthy, time consuming, with lots of paper work.

Step 5 is to determine market value of your house.  Research recently sold houses around your area or comparables.  Also research current listed properties in your area.  The combination of the two will give you a good indication of what properties are selling for in your area.  Then you have to consider the condition of your house, any major repairs required, and upgrades or amenities of your house.  Taking all this into consideration will give you a good idea what the property is worth.

Step 6 is to find a buyer.  Start to market your house using the internet (Zillow), flyers, signs, and word of mouth.  If you are not comfortable selling your house on your own, you may consider a Realtor or a private investor at this point.  Keep in mind one of the requirements of the lender might be is to list your house on MLS.  If this is a requirement, at the very least you will need a listing agent.

Step 7 is to stage your home for buyers.  This may include cleaning the inside of the house, making minor repairs, and outside landscaping.  Curb appeal is important because this is the first impression of the house with potential buyers.  At this point you want potential buyers interested in buying your home.

Step 8 is obtain an offer from a potential buyer.  

Step 9 is the lender will order a Broker's Price Opinion (BPO).  The BPO agent is typically a Realtor who may or may not be familiar with your area.  The BPO agent will do an evaluation of the property and provide the lender with their opinion of the value of the property.  The closer the BPO value and prices buyers are willing to offer, the quicker you will be able to sell your property.  Don't take this step lightly.

Step 10 is contact the lender to determine the BPO value.

Step 11 is to contact the potential buyer and get them to increase their offer.  Submit the new offer to the lender.

Step 12 is to contact the lender with the new offer.  The lender will either accept, reject, or decrease their amount of the offer.  If they accept go to Step 14.  If they reject or reduce their price continue to Step 13.

Step 13 is to contact the buyer with the rejection or reduced price.  The buyer will either accept, reject, or submit a new offer.  If they accept go to Step 14.  If they reject then you are done with this buyer.  Find a new buyer but you will have a better idea what the lender is willing to accept right now.  If they submit a new offer go to step Step 12.

As you can see negotiating with the lender and buyers can be time consuming and frustrating.  Keep in mind better the offer, quicker the sale.

Step 14 is schedule the closing.  This will include finding someone to conduct the closing which is typically a title agency or lawyer.  A lot of tasks need to be completed before the sale is final so make sure you get a good closer to ensure the sale does not fall apart.

Step 15 is a successful short sale.  The buyer received an under market value house, the lender received an agreed upon partial payment of the loan, and the homeowner avoids foreclosure and moves on with their life.

The steps above by no means is how a short sale will exactly proceed.  Instead it is to illustrate the major steps in the short sale process.

In summary, the short sale process is not a cookie cutter approach.  Just understanding the main steps in the process is just the beginning.  You will need to determine how much time and effort you can afford to spend in this process.

If you are hesitant about performing a short sale on your own, don't feel bad.  There are options available for you to consider, like an experienced Realtor dealing with short sales.  We provide a turnkey solution for short sales and the services are free for all homeowners facing foreclosure.  Our philosophy is you are facing foreclosure for a reason and can't afford to pay to work your short sale.  The short sale process is very complex and requires an experienced team working hard on your behalf.  Even if you are currently working a short sale contact us to discuss your situation.

Understanding the process, effort, and skills is not the only consideration in a short sale.  There are other personal ramifications to consider.  The next Short Sales in Orlando Florida lesson we will next discuss some personal ramifications.

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