Capital Region Legal News

Friday, February 17, 2017

How do short sales work in New York?

When the housing crisis started ramping up in 2008, short sales re-emerged as a popular way to sell a home that you are upside-down on, without being liable for the remainder that the sale of the house did not cover. Today, the short sale is as popular as ever in the real estate industry as an alternative choice to the oft-dreaded mortgage modification.

Why do banks agree to short sales?

It turns out that banks lose more in a foreclosure than they do with a short sale. Additionally, under the Home Affordable Foreclosure Alternatives program, the government provides incentives to lenders and mortgage investors, including incentives for sharing some of the proceeds with second-mortgage holders in exchange for releasing their claims to any additional amounts due.

What are the benefits of a short sale?

Short sales come with a number of benefits for buyers and sellers. These benefits include:

  • Privacy for the homeowner. A foreclosure is a public process that can bring with it unwanted attention and embarrassment.
  • Less impact on homeowner’s credit. Obviously late payments will have an impact on your credit score, but avoiding a foreclosure can help avoid a complete credit disaster.
  • Reduced purchase price for the buyer.

What is the short sale process?

Once a bank determines that they will foreclose on the home, they can generally finalize the foreclosure in 35 days from the date of the notice provided to the homeowners.  For this reason, most real estate agents will want to finalize a lender-approved short sale within 60 days of that notice. It is also possible to negotiate a short sale prior to being in default on your mortgage. If you think that you may have difficulty making your mortgage payments, proactively speaking with an experienced real estate attorney can help you preserve your credit.

The first thing that you must do is to provide your lender with information and documentation as to why you need a short sale. The lender will want to see:

  • A hardship letter
  • Proof of income and assets
  • Your last statement of all loans

Your real estate agent will begin the process by listing the home as a short sale. The listing must be explicit that the sale is a short sale. They will also ensure that the potential buyer is qualified.

Once you have identified a purchaser, you will want to get a contract executed between you and the lender. This is where having a short sale attorney can really help you protect your interests. Generally a lender will accept any offer that reflects the current appraised value of the home.

Considering a Short Sale?

Come talk to the experienced real estate attorneys at Ianniello Anderson, P.C. They can quickly assess your situation and assist you in effectuating a short sale of your home. Serving clients in the Albany, Clifton Park, Glens Falls, Saratoga Springs, Troy, and the entire Northeastern NY areas at 518.350.7755.

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