This Case Study chronicles another successful short sale transaction that was completed for a detached home in Aliso Viojo Ca. The home was purchased by the homeowner in March of 2007′ for $770,000, and was located in the Vista De Oro tract. At the time, this home was purchased using Zero down financing. They had a 1st Mortgage of $620,000 and a 2nd mortgage of $150,000. The first loan was a fixed rate and the 2nd loan was an adjustable rate.
The single family detached home was a 2,200 square foot, 4 bedroom, 3 bath home with 2 car garage. This property was sold and closed escrow in December of 2008, via a Short Sale by the Aliso Viejo ShortSalesASAP company. Due to the current financial crisis our economy is in, the home values have decreased by about 35% since the peak in pricing in Spring of 2006′. Orange County, CA. has been affected as well as the Aliso Viejo area. This Aliso Viejo short sale property decreased in value by about 25% from the time this home was purchased in 2007′, until it was sold at the end of 2008'.
Unfortunetly, the homeowner was having a very difficult time keeping up with their loan payments. They were upside down $200,000 and their debt to income ratio was to high to qualify for a Loan Modification.
In the Short Sale Preparation Phase we gather all of the required documents from the homeowner and contact the banks to present our short sale case. With some extensive negotiations, our expert team was able to obtain preliminary approval for the Short Sale along with terms and conditions. This Preparation Phase took around 4 weeks to accomplish. During that time the homeowner was able to live in the property, with no interruptions from other agents or prospective home buyers. In addition, they were able to stop making their mortgage payments and live rent free.
The next phase in the short sale process is the Marketing and Sales portion. The home was heavily marketed and posted in the Multiple Listing Service (MLS) at a price of $649,000. After 3 weeks, the price was dropped to $599,900. We obtained a qualified Buyer and after several counter offers, we were able to get them to offer $580,000 to purchase this home.
In the closing phase, we have the the buyer and seller sign the purchase contract and opened escrow for closing. At this time we packaged the purchase offer, Short Sale disclosures and Buyers loan qualification paperwork and submit the updated package to the 1st and 2nd mortgage banks. Our post short sale specialist then expedites the delivery of these documents to the bank's negotiators to finalize the short sale and obtain the approval letters in writing.
If you are wondering why a mortgage bank would accept a short sale, the reasons is pretty simple. The bottom line is that banks have found that they loose 15% more when they foreclose as compared to approving a short sale. These savings are due to reducing loss of the time, value of money, avoiding property damages, eliminating foreclosure legal expenses, and minimizing bank management overhead expenses.
At the completion of this short sale, the homeowners mortgage debt was completely eliminated. The homeowner lived in their home during this short sale process and did not have to make any loan payments which helped them during these financial hardships. They were also able to rent a comparable home for considerable less then what their payments used to be. In addition, the homeowners credit was less damaged by the short sale as compared to a foreclosure. Moreover, Fannie Mae (FNMA) altered their underwriting policy, so that a past homeowner only has to wait 2 years before they can buy another home using FNMA underwritten loans. If the homeowner went through foreclosure proceeding, their waiting period would be 5 years!
ShortSaleASAP is licensed with the California Department of Real Estate. Our services are free to the homeowner, for we are paid by the mortgage bank(s). If you have any questions regarding Short Sales, contact our team of experts at: (949) 388-3396 or drop us an email at: Info@ShortSalesASAP.com
