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                  <ul>
                    <li><font face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers"><b>What 
                      is a short pay off?</font></b> </span></font><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Imagine 
                      your home is worth $200,000, but you owe $220,000 on it. 
                      If you were to sell it in the open market at $200,000, you 
                      might net $184,000, or $36,000 less than what you need to 
                      pay off the loan. A short pay off is where your lender will 
                      forgive a portion or all of the short amount.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">What 
                      lender would just write off that type of money?</font></span></span></font></b> 
                      <br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Just 
                      about all of them will, with justification. Justification 
                      might mean a substantial loss of income that would prevent 
                      you from paying on the mortgage, therefore being forced 
                      in a position to sell the home. Attempting to sell short 
                      so you can upgrade to a larger property is not justification. 
                      In addition, lack of cash reserves will also serve as justification. 
                      Don't expect to place your home on the market at 75% of 
                      market value and expect your lender to jump on any offers.</font></span></li>
                  </ul>
                  <ul>
                    <li><font size="3"><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif"><span class="headln"><span class="headers">How 
                      will this affect my credit?</span></span></span></font></b></font><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Depending 
                      on how you negotiate the transaction, it could go on your 
                      credit report as, &quot;settled,&quot; or, &quot;paid,&quot; 
                      or &quot;short payoff.&quot; It depends on the lender and 
                      how well you can negotiate.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">Are 
                      some lenders harder to deal with than others? </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Yes. 
                      If you have a Freddie Mac loan, Freddie Mac will probably 
                      want you to contribute to the short sale, get your agent 
                      to reduce brokerage fees, and get the buyer to take the 
                      property with the termites. Some lenders will just ignore 
                      you.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">What 
                      will my lender require from me in order to consider participating 
                      in a short sale? </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><span class="bodytext"><font size="2"><span class="bodytext">Packaging 
                      is very important. When you place the property on the market 
                      (go with an agent), your agent should send the lender the 
                      following:<br>
                      </span></font></span></font></span> 
                      <ol>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Your 
                          past 2 years tax returns </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Letter 
                          of hardship </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Complete 
                          loan application </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Preliminary 
                          title report </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Listing 
                          contract </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">Copy 
                          of MLS </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">A 
                          marketing plan for your home </span></font></span></font></span></li>
                        <li><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">A 
                          broker price opinion (like an appraisal). </span></font></span></font></span></li>
                      </ol>
                      <p><span class="bodytext"><font size="2"><span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif"><span class="bodytext">When 
                        you have an offer, all of the above should be enclosed 
                        with the offer (except for the marketing plan) plus the 
                        purchase agreement, and a good faith estimate as to what 
                        the lender will net after the close of escrow. </span></font></span></font></span></p>
                    </li>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">Why 
                      should I list with an agent? It seems if I can save the 
                      brokerage fee that the lender would net more and be more 
                      inclined to accept any offers that come in. </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">You 
                      are correct. If you're loan is current, you may be able 
                      to get a qualified buyer yourself. If your loan is delinquent, 
                      or in default, you don't have time to play around getting 
                      your home sold. You need as much exposure as possible.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers"><span class="headln"><span class="headers">What 
                      happens if my lender say's &quot;No,&quot; and I'm in foreclosure?</span></font></span></span></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">This 
                      is one situation where &quot;No,&quot; means, &quot;Maybe, 
                      you just haven't convinced me that participating in a short 
                      sale is to my benefit.&quot; Keep hammering your lender, 
                      and do not take your home off the market until your lender 
                      agrees to a sales price and the prospective buyer has formal 
                      loan approval.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">Should 
                      I try to hide any assets in order for the lender to consider 
                      participating? </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Most 
                      assets are traceable, except for personal collections (guns, 
                      coins, etc.). If you own another property, it will show 
                      up on your credit report. Your lender may back track to 
                      your original loan application to see if there are any other 
                      assets. No, don't hide assets. If your lender discovers 
                      you're not dealing honestly, they'll never co-operate. </font></span></li>
		    </ul><ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">Can 
                      any real estate agent or attorney handle a short sale?</span></font></span></font> 
                      </b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">A 
                      lot will say they can. There's no real way to tell if they 
                      can. If your home goes into foreclosure, you'll get flooded 
                      with a ton of mail. There's a good bet that most of the 
                      mail is from people who have helped out previously in these 
                      situations. One way to tell is if the person you're dealing 
                      with will ask you for the information outlined <a href="#above">above</a>. 
                      They'll know these are the requirements.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">Question: 
                      I believe that in California, the loan is secured by the 
                      property, so the bank cannot go after your assets to make 
                      you pay the remaining balance of the loan. The bank will 
                      try and guilt you into doing so, ignore them. If they refused, 
                      threaten to foreclose and be ready for the bank to do so. 
                      At that point, they will usually negotiate. I'm sure this 
                      info won't be added to the real estate criter's FAQ.</span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Actually, 
                      this is a good example of a misnomer in the foreclosure 
                      arena so this &quot;real estate criter&quot; is going to 
                      add it to the FAQ. There are no deficiency rights in California 
                      for <b>Purchase Money Loans</b>. This is the loan you obtained 
                      in order to purchase the property. Once you refinance the 
                      property, take out an equity line of credit, obtain a consumer 
                      loan that is secured by the property, this rule no longer 
                      applies. The lender has the right to go after you in a deficiency 
                      judgement, even if a senior lien holder takes the property 
                      back and a junior loses his security instrument.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" size="4" face="Verdana, Arial, Helvetica, sans-serif"><span class="headers">How 
                      can I assure a non-purchase money lender won't go after 
                      me after the short sale? </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">When 
                      any lender agrees to a short pay, they are relinquishing 
                      their right to pursue the borrower in the future</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" size="4" face="Verdana, Arial, Helvetica, sans-serif"><span class="headers">Are 
                      there any tax ramifications? </span></font></span></font></b><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2" class="bodytext">Yes. 
                      According to IRS Section 108 a-e, there are debt/income 
                      interpretations that may come into play. The IRS may view 
                      the deficiency on a non-purchase money loan as income and 
                      demand you to pay taxes on that amount. If the short pay 
                      transaction resulted in a net loss of $20,000 to the lender, 
                      your tax liability could be around $6,350.</font></span></li>
                  </ul>
                  <ul>
                    <li><b class="headers"><font color="#BD827B" face="Verdana, Arial, Helvetica, sans-serif" size="4"><span class="headers">So 
                      why would I want to do a short sale only to owe the IRS 
                      money? </span></font></span></font></b><br>
                      <span class="bodytext"><font size="2">T<font face="Verdana, Arial, Helvetica, sans-serif" class="bodytext">o 
                      limit your tax liability. In some cases (not Citicorp, Fannie 
                      Mae, or Freddie Mac) the senior lien holder will allow for 
                      some funds to be allocated to the juniors. If you allow 
                      the property to go into foreclosure, and the juniors lose 
                      100% of their money, you can get taxed on the full amount. 
                      You should really contact a CPA concerning this part of 
                      the Tax Code.</font></font></span></li>
                  </ul>
                  <ul>
                    <li><font size="3" class="headln" face="Verdana, Arial, Helvetica, sans-serif"><b class="headers"><font color="#BD827B"><span class="headers">I 
                      have an FHA loan. They won't do a short pay. Any suggestions? 
                      </span></span></font></b></font><br>
                      <span class="bodytext"><font face="Verdana, Arial, Helvetica, sans-serif" size="2"><span class="bodytext">Any 
                      feedback from other states would be appreciated. There are 
                      certain regions where FHA will not participate in short 
                      sales. One region is the state of California. If you are 
                      in foreclosure on an FHA loan in California, you may want 
                      to approach HUD to see if they will consider a lower interest 
                      rate, or some type of repayment schedule until you get back 
                      on your feet. </span></font></span></li>
                  </ul>
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