How To Avoid Foreclosure In Los Angeles Short Sale Process From A To Z

Even though the rate of foreclosures has slowed down

, a number of real estate owners across Los Angeles still live in the fear of losing their property to foreclosure. However, if you are a troubled real estate owner, do know that there are options that can help you avoid foreclosure. For starters, understand that banks and lenders are often willing to work out arrangements that can override foreclosure proceedings because they do not wish to have more properties on their existing inventory of foreclosed real estate. Also, Federal and state governments have provided incentives to both lenders and property owners to avoid foreclosure.

To explore your options, you should contact a knowledgeable real estate professional that has expertise in working with property owners facing foreclosures and foreclosure real estate in your area. Of course time is of an essence. You should contact the real estate professional before your property is being taken over by lender through foreclosure process.

There are some options in avoiding foreclosures such as refinance or loan modification. But the main option for many property owners that are facing foreclosure is short sale

Short Sale:

A short sale is a completely legal option that can help you avoid foreclosure. In this scenario, you would essentially sell your property for less than what you need to pay to your mortgage lender, and the lender would agree to write-off the loan in question in return of this reduced payment. Bear in mind that a short sale can only take place if the lender is willing to accept lesser money than what is owed on the mortgage. But good news is that almost all of the lenders would consider doing short sale.

In case youre wondering why a lender would be willing to accept less money than whats due, the reason is quite simple. Besides the government incentives, majority of the banks/lenders do not really wish to foreclose properties as these result in additional costs in fees and management of the properties. Of course convincing the lender for a short sale, though, lies with the property owner. Property owners must show sufficient evidence in form of tax returns, pay stubs, bank statements, and so on that they are in financial hardship and cant afford their monthly mortgage payments. The fact that property is under water doesnt warrant for short sale.

Just like a regular sale, short sale property is marketed to potential buyers. Once an offer is obtained and accepted by seller, the executed offer, listing agreement, financial package and other relevant documents would be sent to the lender(s) to start short sale negotiation. Depending on the lenders and number of loans on the property, the process could take 45 to 90 days. Lenders would assign processors or negotiators to the file and evaluate the offer, market value of the property and the sellers financial hardship. Once the short sale is approved, lender would issue an approval letter with price and all the expenses that is willing to pay. Although lenders would pay for the brokers commission and other closing costs, there are circumstances that the bank wouldnt allocate enough money for closing costs. In that case, seller and or buyer are responsible to cover the remainder of the fees. This is one of the reasons to obtain the services of a knowledgeable short sale agent. A Short sale Real estate professional should have multiple back up offers and be able to identify buyers that are aware of the fact that they may need to pay more for the short sale.

Lenders would typically not pay for the IRS liens, California Franchise Tax board liens or any other liens on the property except for property taxes that are past due. So to complete the short sale, these liens must be removed and clear title to be transferred to new owner. It is important to consider these liens and try to negotiate with both buyers and lenders to agree on price that would pay off all the liens. However there are ways to remove IRS or California Franchise tax board lien during short sale process. It is also important that you work out all the details of the short sale for the second loan. Most second lien holders would approve a short sale for pennies on dollar. However its important to make sure that the lender would release the seller from liability of the second loan.

Since these processes can be quite daunting, do not refrain from taking professional Los Angeles foreclosure broker help and do remember that not every real estate broker or agent knows how to go about it in the right manner.

by: Shawn Shayestehfar

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