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Brett Henry
 Experienced Short Sale Negotiator
Simple Choice Real Estate

Phone: 801-228-1683
Email: brett@househelputah.com

Testimonials

Thank you for your help with our short sale. With the foreclosure sale date so close we were really worried we wouldn't be able to prevent our foreclosure. All your work and persistance paid off. We were able to prevent the foreclosure sale and now we can sleep again at night. Thank you again! Lelani Andersen
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Questions and Answers



Q: What is a Short Sale?
A: Simply put, a short sale is when the lender agrees to accept less than what is owed on the property. If a borrower is unable to pay their mortgage and can not afford to stay in the home, a short sale is an alternative to foreclosure. Example: A lender is owed $100,000 on a property. The borrower is behind and can no longer afford payments due to job loss, death, divorce Etc... The lender will accept a short payoff for $85,000 and the borrower is released from further payments and or obligation on the mortgage.


Q: Why do a short sale?
A: If you can no longer afford to pay your mortgage and your home is not worth what is owed, doing a short sale is a much better alternative than letting the lender foreclose on the property. This allows you to avoid the damage of a foreclosure on your record for 7-10 years.  A short sale is not nearly as damaging to your credit as a foreclosure and most of the time the lender will forgive the loss with no further consequence to the borrower. 


Q:  Why would the bank accept a short sale?
A: There are a number of reasons a lender wants to agree to a short sale. There are a number of costs that occur when taking a property back by foreclosure (attorney fees, property management, etc.). It will generally cost the lender more money to take the home back through foreclosure then it will to accept a short sale, provided the offer is within an acceptable range of the lenders Appraisal.
 

Q:  Can anyone do a short sale?
A:  No, in Utah if you bought the property as an investment, most lenders will not consider a short sale.


Q: Can I get money back from doing a short sale
A: No, the lender will not allow the borrower to receive any of the proceeds from a short sale. They are entitled to any remaining escrow and impounds as well. If you have an FHA loan, and do not have any other liens or judgments against your home, you may qualify to receive up to a $1000 from proceeds of the sale. I have seen rare instances where the lender will offer the borrower an incentive to do a short sale.


Q: What are the consequences of doing a short sale?
A: In the worst case scenario, the state of Utah does allow for a deficiency judgment. This would allow the lender to seek a judgment against you for the difference between what is owed and what the property is eventually sold for. The lender is more likely to seek a deficiency judgment on a property they have had to foreclose on to take back, rather than one they have accepted a short sale on. More commonly, after a short sale, the lender will issue a 1099c. This allows them to write off the amount of the short payoff. The Mortgage Forgiveness Debt Relief Act of 2007 allows the borrower to be declared insolvent of this gain so that it does not count towards your income. There is an IRS form 982, which allows for this insolvency, however, please note, the home must be your primary residence in order to be eligible for this to not count as income. Consult with a tax professional if you have concerns regarding the tax consequences of doing a short sale.  Also, lenders will report the status of the loan to each credit bureau. This could be a negative mark on your credit. Our goal is to negotiate with your lender for a release of their lien as payment in full without them seeking a deficiency judgment or issuing a 1099c. It is important that when dealing with a short sale that you are working with a competent professional who has experience and will negotiate the best possible outcome for you.

Q: What is a deficiency judgment?
A judgment filed against the borrower for the difference between the amount owed on the home and the amount paid to the lender. Example: You owe $100,000 on your Utah home and your lender agrees to release their lien for $90,000. You could be liable for a $10,000 deficiency. Also, if you owe $100,000 and your Utah home is foreclosed on and sold at auction for $90,000, you could be liable for a $10,000 deficiency.

Q: What is a Notice of Default "NOD"?
A: A "Notice of Default" is a document that is recorded with the county recorder's office by a trustee and formally starts the Utah foreclosure process. A copy of the "Notice of Default" is usually mailed out the defaulting party. In Utah a Notice of Default can be filed by the lender within 90 days off the account going delinquent.

Q: What is a "Notice of Trustee Sale"?
A: A "Notice of Trustee’s Sale" is a document that is recorded with the county recorder's office and placed on the property which states the date time and location that the property will be put up for auction. (Foreclosure date). The lender can set a trustees sale 90 days after the Notice of Default is filed. The lender must serve notice of the trustees sale 3-4 weeks prior to the sale taking place.  

Q: How much will a short sale cost me?
A: 99% of the time, there are no costs to you to do a short sale in Utah, the lender will pay for all closing costs and commissions.

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