Eric Slifkin, Broker Associate

At first it was those crazy adjustable mortgages that drove thousands of homeowners into short sale or foreclosure situations. But with the worsening economy, increasing joblessness and ballooning energy costs, many homeowners previously unaffected by the mortgage meltdown are facing similar circumstances through no fault of their own. In an effort to stave off foreclosure and lessen the impact on their credit rating, many distressed homeowners are turning to short sales as an alternative.

What is a short sale? Basically a short sale is when the value of the mortgage is greater than the value of the property. When this occurs the homeowner may opt to sell "short" with the lender accepting less than what is owed on the mortgage.

Homeowners may become eligible for a short sale when they are delinquent on their mortgage payment (usually around two months) and can demonstrate the inability to pay their mortgage. The homeowner is also considered in pre-foreclosure when this occurs and the lender sends a notice of default or lis pendens (a document filed in the public records that notifies any prospective purchaser of property that there is litigation pending that could effect title to the property). A short sale can still take place during the foreclosure process except when the foreclosure is completed and the home is up for auction or the homeowner files for bankruptcy.

While dealing with your lender may seem daunting, working with a real estate professional can help you through the process. You will want to choose an agent who has experience in this area. There are also third party services cropping up that will lend assistance for a fee. Here is an overview of the steps typically required to complete a short sale.

Initiating the short sale will typically require:

1. A hardship letter explaining your circumstances
2. Two months of bank statements (W2, 1099, tax return, etc.)
3. Budget Sheet
4. Authorization to Negotiate (allows your agent to communicate directly with the lender)

Note: the lender will typically have a series of forms for you to complete as well.

Supporting documentation you may need:

5. Broker Price Opinion or Market Analysis
6. Photographs of the home
7. Repair Estimates

Once you find a buyer:

8. Signed Sales Contract with Short Sale Addendum
9. Preliminary HUD-1 (details estimated closing costs)
10. Latest comparable listings and sales

Once you have submitted your hardship letter and supporting documentation to your lender it's a waiting game. At this stage a loss mitigation officer may be assigned to your case or it may go into an administrative area until a buyer is procured or foreclosure occurs. While waiting for the lender's approval, your agent will list and begin marketing the property (note: some lenders will not approve the short sale until a contract is pending). Once a buyer is found and the sales contract submitted for approval your agent will keep the process moving along with follow up calls to the loan mitigation officer.

Short sales are a challenge at best and the requirements differ from bank to bank, but lending institutions are finally beginning to respond proactively and are working in tandem with real estate professionals to speed the process. As this is being written legislation is underway that may ease the process and offer alternatives to short sale or foreclosure.

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Disclaimer: the author does not assume any responsibility for any errors, omissions or contradictory interpretations of the subject matter contained herein. The information provided is for reference purposes only and is not intended to be used as a source of legal or accounting advice.

Need information about relocating to the Palm City or Stuart, Florida area? I can help! Please submit the form below with any questions you may have about Palm City or Stuart, Florida real estate, market conditions, neighborhoods, new communities and homes for sale or rent. I can also provide information on schools, services and our Treasure Coast lifestyle.

Lake Tuscany is a new Mercedes community located just west of I-95 in Stuart. The homes feature unique architectural designs in a gated community with preserve and lake views. Lake Tuscany is just minutes to schools, shopping, golf, beaches and marinas with easy access to both-95 and Florida's turnpike. More >>

Copyright © 2008 By Eric Slifkin, All Rights Reserved.. *Neighborhoods in Stuart Florida | Lake Tuscany* Contact Eric Slifkin for Palm City and Stuart Florida real estate.

Savannah Oaks is an enclave of custom-built estate homes with a country feel yet located within walking distance to the shops and restaurants of Jensen Beach. It is only minutes from Hutchinson Island beaches via the Jensen Beach Causeway, and a short drive to world-class golf, boating, the Treasure Coast Square Mall and US1 shopping. Residents enjoy "A" rated schools including the new Jensen Beach High with its state-of-the-art facilities.

Savannah Oaks is comprised of 21 home-sites situated in an uncrowded, natural setting. Each lot offers preserve views while the homes feature upgraded appliances, custom interiors, concrete block construction, impact glass windows and Key West style metal roofs. Its convenient coastal location and recreation opportunities exemplify the Florida lifestyle.

Copyright © 2008 By Eric Slifkin, All Rights Reserved.. *Neighborhoods in Jensen Beach Florida | Savannah Oaks* Contact Eric Slifkin for Palm City and Stuart Florida real estate.

Renters all along South Florida's Treasure Coast are being affected by the spate of foreclosures. Besides homeowners facing foreclosure, a growing number of my rental clients are being evicted from those same homes being foreclosed. They have discovered that they are not immune from the financial fallout of the beleaguered real estate market.

With mushrooming foreclosure filings it's not just just owners losing their homes - in many cases these homes are also rental properties and because lenders are not usually interested in managing rental properties, tenants are finding themselves displaced in the process. Not only are tenants being forced to vacate, but because they typically have no knowledge of the landlord's deteriorating financial situation, they are often taken by surprise.

Landlords Not Communicating With Their Tenants

Frequently, renters find out that their rental home has been foreclosed on when they are warned that an eviction notice is forthcoming from the lender. This notice gives the renter a chance to voluntarily vacate the premises before eviction proceedings take place.

Even if the renter's lease isn't up for several months, the tenant may get less than 60 days to vacate the premises once evicted - in most states a foreclosure makes a lease obsolete. Since the lease signed by the renter is no longer in effect, the lender(and new owner) is not obligated to perform any maintenance or continue any other services the tenant may be entitled to, except for continuing basic utilities such as electricity and water.

While it is nearly impossible to know if your landlord is having money problems, when repairs start getting ignored or if your landlord becomes unresponsive to your needs, you may want to consider the possibility he is being foreclosed on before signing a new lease. Many prospective tenants are now checking tax rolls and public records to see if there are any lis pendence or other proceedings underway. But even that is no guarantee as mortgage rates adjust after move-in and owners default on their loans. One measure of protection against insolvent landlords is working with a rental agent who has intimate knowledge of his landlord clients. While that is no guarantee, an agent's relationship with the property owner provides some reassurance that you will not find yourself in the throes of an eviction due to foreclosure.

Copyright © 2008 By Eric Slifkin, All Rights Reserved.. *Florida Treasure Coast Renters Affected By Foreclosures* Contact Eric Slifkin for Palm City and Stuart Florida real estate.