● Real Estate Law
  Seacoast Law & Title is one of the few law firms in New England to offer comprehensive real estate services to both individuals and small businesses by combining its real estate expertise with its own in-house abstracting and settlement company.

  At Seacoast Law & Title, our real estate practice encompasses forcible entry and detainer issues, purchases and sales of both residential and commercial properties, land use regulations, land trusts, land corporations, construction contracts, foreclosures, and deed preparation.

  Seacoast Law & Title also provides abstracting, title insurance, loan document preparation, and settlement services to individuals, professional realtors, and financial lenders in both commercial and residential matters.

  Recognizing the importance of comprehensive support to our clients, our firm also provides a variety of collateral referrals to some of the best resources in the industry including, but not limited to, mortgage financing, land development, residential builders, credit counseling and repair as well as tax advisement.

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Short Sales are in the news.
This is a basic overview of what a short sale is and how it works:

▪  Introduction

It is not a secret that the real estate market has sunk and your house, more than likely, is not worth what you paid for it just a few years ago.  Before you are foreclosed upon, consider a short sale and talk to your Lender.  Communication between you and your Lender is crucial. 

▪  What is a short sale?

A short sale is the lender accepting less then what is owed for full payment on a loan. If you borrow $250,000 and sell your home for $200,000 and the lender agrees to accept the $200,000 as full payment on the loan, then that is a short sale.

▪  Statistics

Short Sales have become a necessary fact for many, many Americans.  Most don’t even realize this is an option instead of foreclosure.  As a matter of fact, 1 out of 172 mortgages are in foreclosure today; 1 in 100 mortgages are on the foreclosure spectrum; and 1 in 11 people are late on their mortgage payments. 

▪  When is a short sale allowed?

It is up to the lender. You must be in a hardship.  Hardship is defined by the Lenders as circumstances out of ones control.  Some examples would be:  job loss, job relocation, family illness, divorce, significant increase of mortgage payment due to an interest adjustment, and an unforeseen increase in living expenses.  One of the first steps in applying for a short sale is the hardship letter. You must explain why you are unable to no longer live up to your financial obligations. The point is that a lender will need solid reasons to allow a short sale.

▪  Where do I start?

First of all, it is more likely than not that the Lender does NOT want your house and will be willing to consider a short sale.  BUT, you will have to prove your hardship.  You should do a monthly budget which proves why you can’t afford your payment.  You will need to contact your Lender immediately.  There will be lots of forms and questions. You get these forms from the Loss Mitigation Department of your lender. Start with the customer service number on your loan bill and ask how you apply for a short sale or how you contact their Loss Mitigation department.  Your Realtor may be able to help you with this process.

▪  Should I continue to make my mortgage payments?

The short sale process is for those who are unable to make their loan payments, not people who would rather spend their money elsewhere. Contact us to set up a consultation to discuss your options including credit counseling or bankruptcy, if need be.  Once you stop making loan payments, you will receive a delinquency notice and technically enter the “pre-foreclosure” period. This is the period you contact your lender and their Loss Mitigation Department.

▪  When should I involve a Realtor?

Often home owners will already have their homes on the market in an attempt to sell the home for a profit or to pay off the lender. In this case you should already have a Realtor and that professional can assist you through the process of the short sale. However, it is the responsibility of the home owner to apply for the short sale. If your home is not on the market already, then the lender will generally insist on a realtor to place your home on the Multiple Listing Service. When shopping for a realtor, ask if they are familiar with the short sale process or ask an office who is the agent most experienced with short sales. We can also direct you toward a qualified Realtor.  A good realtor will make all the difference.

▪  How will this affect my taxes and credit?

The Mortgage Debt Forgiveness Act of 2007 allows gains on a short sale to be forgiven up to $1 million on a primary residence if sold in 2007, 2008 and 2009. Believe it or not, if you sell your $250,000 home for $200,000 and the lender accepts that amount for full payment, it is considered a gain of $50,000. Prior to the Mortgage Debt Forgiveness Act you would have to pay income tax on that gain. Of course you should always consult your accountant for details and eligibility.  A successful short sale will bring your credit score down 80-100 points, whereas a foreclosure will bring your credit score down 200-250 points. 

▪  When can I apply for another loan?

Typically, if the short sale is successful (meaning the short sale has closed and the property is sold) you can expect to be eligible for another loan in approximately 18 months with a reasonable interest rate.  If you were to be foreclosed upon, the expected wait before you can apply for another loan would be 3 years.  It ultimately is the Lender’s decision.

 ▪  Bottom Line!