Short Sales Explained

AFA (Home Affordable Foreclosure Alternative) is a federal government program designed for homeowners whocan no longer afford their mortgage payments and wish to

avoid the negative impacts of foreclosure when home retention is notan option. Under HAFA, a homeowner can exit home ownershipgracefully and without the liability associated with their mortgage debt.

The Benefits of a HAFA Short Sale:• No Deficiency Judgments • No Cash Contributions at Closing • No Promissory Notes • $3,000 to Seller for Relocation Assistance • Up to $8,500 from sales proceeds available as payment to additional

lien holders to release seller from future liability

Eligibility Requirements for a HAFA Short Sale: • Property is SFR owner occupied, vacant, or rental property**

**check eligibility restrictions for Freddie Mac and Fannie Mae loans

• Seller must have a documented hardship • Mortgage originated on or before January 1, 2009 • Mortgage is delinquent or default is foreseeable • Current unpaid principle balance is $729,750 or less (1-4 units)

For more information about this program, please call me and I will help youbetter understand a HAFA short sale.

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“short sale” is a real estate transaction in which a home seller’s mortgage lenderagrees to accept a payoff that is less than the amount owed on the mortgage.When homeowners find themselves with a serious financial hardship, and owe

more on the mortgage than the home is worth, a short sale may be a way to avoidforeclosure by negotiating a settlement with the lender.

A successful short sale can be a “win” for all parties involved: the selleris relieved of the financial burden of the mortgage, the losses taken bythe lender in the short sale can be significantly less than an eventualforeclosure, and the buyer gets a fair deal on the purchase.

Negotiating a short sale is no easy task; therefore, homeownersconsidering a short sale should work with a licensed real estate

professional who specializes in short sales. An experienced agent/broker will be wellqualified to guide a homeowner through the short sale process, facilitate communicationand interaction with the lender, assist with collection of lender-required documents, andbring the transaction to a successful close.

AUnderstanding the Short Sale Transaction

short sale requires anexperienced real estate agentto navigate the transaction. If

you have family or friends who needthis expertise, please refer them tome for professional guidance.

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his newsletter is dedicated to educating

homeowners on short saletransactions. If you areconsidering a short sale, I am available to discussoptions with you.

hort sale properties present avariety of risks for a homebuyer. Homes are frequently

sold “as is” and the true condition ofthe home’s systems and appliancesis likely unknown. Due to theseinherent risks, it is more importantthan ever to include the protection of an Old RepublicHome Warranty when purchasinga short sale property.

Valuable benefits provided by ahome warranty include riskreduction, budget protection, andpriceless peace of mind. Thewarranty also provides coverage forundetectable pre-existing conditionsthat could surface after close-of-sale.

If you’re considering purchasing ashort sale home, I recommendsafeguarding your investment andyour budget with an Old RepublicHome Warranty. Call me today for more information, or visitwww.orhp.com.

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If you are working with another Real Estate Professional, please disregard this notice. The material in this publication is for your information only and not intended to be used in lieu of seeking additional consumer or professional advice.

What is a HAFA Short Sale?

RAMANA REDDY

CALHOMES510 LAWRENCE EXPY STE 213SUNNYVALE, CA 94085-4016

ramana@ramanareddy.comTel: (408) 732-2300

Mobile: (408) 242-9838BRE Lic. #: 01348354

Home of Real Estate & Mortgage510 LAWRENCE EXPY STE 213, SUNNYVALE, CA 94085-4016

Tel: (408) 732-2300, Mobile: (408) 242-9838, ramana@ramanareddy.com, http://www.CalHomes.org, BRE Lic. #: 01348354

Basic Steps for a Short Sale Transaction

This is not intended as a solicitation if your property is currently listed with another agent. The articles may contain information obtained from third parties. ORHP does not endorse therecommendations of any third party nor guarantee the information provided is complete or correct. Copyright 2013

Do You Qualify for a Short Sale on Your Home?

n the short sale process, you sell your home and settle your mortgage debt for less than the amount owed. You may beeligible to sell your home in a short sale if:

If you qualify and want to move forward with a short sale, it is highly suggested that you consultwith a professional real estate broker/agent who is experienced in short sale transactions. See the“Basic Steps for a Short Sale” article in this newsletter for a general idea of the process…but keepin mind that the steps may vary depending on the lender requirements and/or the advice of the realestate professional who will guide you through the process.

I• You have a hardship, such as a job loss,

divorce, or medical emergency

• You owe more on the mortgage than your house is worth

• You’re unable to afford your current monthly mortgage payment

• You’re unable to modify your current home loan

Choose a real estate professional who specializes in short sales to help you with these steps:

Complete these steps for each lender that is involved—every lender has its own process. Some lenders that are in second position (2nd trust/mortgage) will only start processing their short sale after they’ve received written short sale approval from the first trust. Thismeans that the overall short sale approval process may take twice as long if there are two trusts/mortgages secured by the property.

Consult with an attorney and/or a licensed tax professional to understand all your obligations relating to a short sale.

1.Complete a property valuation analysis – lenders will only approve a short sale if the borrower owes more than the property’s fair market value

2.Contact the lender for a short sale application

3.Collect the financial data and other information required by the lender – include a fact-based letter detailing borrower’s hardship and current financial situation

4. List the property for sale

5.Receive and ratify a purchase contract from a qualified buyer

6.Return the purchase contract to the buyer (and to the lender, all ofthe lender-required documentation)

7. Be persistent, but patient – ideally, it should take 30-45 days for a purchase contract to work its way through the lender’s system, but the process could take longer

RAMANA REDDYCALHOMES510 LAWRENCE EXPY STE 213SUNNYVALE, CA 94085-4016Tel: (408) 732-2300Mobile: (408) 242-9838Fax: (408) 519-8181http://www.CalHomes.orgBRE Lic. #: 01348354