For someone going through a divorce and facing foreclosure on their home at the same time, a short sale may be the best way to handle a bad situation.
Paul Da Costa, a North Port, Fla., mortgage broker who specializes in foreclosures and works with investors, said, “You’re better off getting your property sold at a short sale than going through the foreclosure process. Every bank is different when it comes to short sales. Some will send you a short sale package to fill out and others will tell you they can’t do anything for 90 days.”
A real estate short sale is when a home sells for less than an individual owes the bank on his mortgage. Obviously it requires bank approval. “A person in this situation needs to be proactive and contact his bank immediately. Tell your banker, ‘I’m going to list my house with a Realtor® who understands the foreclosure market,’” Da Costa said.
“The bank is going to ask you to tell them your story. They want to know why you believe you qualify for a short sale. To qualify you must have had serious problems that caused financial reverses: a divorce, illness, lost your job or your business failed, for example. “The hardship letter is key. I counsel my clients to give the banker in detail what happened in their case to make it impossible for them to continue to make the mortgage payments,” Da Costa said.
“After you get your property listed with a Realtor® knowledgeable in the foreclosure process, a potential buyer will make an offer on the property. This information is submitted to the bank,” he said. “At that point the bank will send someone out to make a competitive market analysis of the property. The banker will then decide if he is willing to accept the short sale offer. It’s at this point the negotiation for the sale of the house begins.”
The first three questions Da Costa asks someone who comes to see him about selling their home before the bank forecloses:
1. Have you talked to the bank? "In 99 percent of these cases they haven’t.'
2. Have you talked to a real estate attorney? "Their answer is almost always, ‘No.’
3. Have you talked to a Realtor® about selling your property?
"That’s a 50-50 proposition.”
Da Costa said he emphasizes time is of the essence. “I give them the names of three competent Realtors® I’ve used in the past they can contact. I also give the names of a couple of knowledgeable real estate attorneys,” he said.
“Once the bank realizes I’ve become involved in the foreclosure process the situation for the individual in the bind with his housed usually improves. Bankers realized they are dealing with a licensed mortgage broker who understands the foreclosure process and is trying to help,” Da Costa said.
