ABA consumer guide to short sales : a practical resource for buyers and sellers

Since 2008, 2.2 million U.S. homes have been sold via short sales, providing financial relief to strapped homeowners and opportunities for savvy buyers and investors. In a short sale, the lender accepts less than the full amount owed on the mortgage and releases the homeowner from any future payments. The ABA Consumer Guide to Short Sales explains how a consumer can make the most out the federal program governing short sales, the Home Affordable Foreclosure Alternative, and how a buyer can purchase a short-sale property at less than market value. The book translates technical guidelines into an easy-to-understand, practical resource that will help homeowners and potential buyers to evaluate whether a short sale transaction is the right choice for their circumstances and to discuss the short sale option knowledgeably with their lenders.

• Preface p. xi
• Introduction p. xiii
• Chapter 1 Know the Players p. 1
• Lender p. 1
• Real Estate Broker p. 3
• Escrow or Closing Agent p. 3
• Trustee p. 3
• Others p. 3
• Summary p. 4
• Chapter 2 Short Sale p. 5
• What Is a Short Sale? p. 6
• Deficiency p. 6
• Considering a Short Sale p. 7
• HAFA p. 8
• Deed-in-Lieu of Foreclosure p. 9
• Summary p. 9
• Chapter 3 Buyer Beware p. 11
• The Long Short Sale p. 11
• The Need for Teamwork p. 12
• Making an Offer p. 12
• Buyer Financing p. 13
• Property Condition p. 14
• Other Liens p. 14
• Tenants p. 15
• HAFA Agreements p. 16
• Short Sale Notice p. 16
• Acknoivledgment of Request for Short Sale p. 16
• Contract Contingencies p. 17
• Buyer Financing p. 17
• Sale of Property p. 17
• Closing Deadline p. 17
• Lender Nonapproval or Approval of a Competing Offer p. 17
• Cancellation by the Seller p. 17
• Cancellation by the Buyer p. 17
• Summary p. 17
• Chapter 4 Managing the Short Sale p. 19
• Intitiating HAFA p. 19
• Lenders and HAFA p. 20
• A Borrower's Eligibility of HAFA p. 20
• Evaluation of HAFA Eligibility p. 21
• Listing Price p. 22
• Borrower Protections p. 23
• Release of Liability p. 24
• Suspension of Foreclosure p. 25
• Relocation Assistance p. 25
• Short Sale Notice p. 26
• Terminating the SSN p. 28
• Approval of a Short Sale p. 28
• Alternative: Start with the Sales Contract p. 29
• Deed-in-Lieu of Foreclosure p. 30
• Short Sale versus Modification p. 30
• Summary p. 30
• Chapter 5 Escalation p. 33
• Resources p. 34
• Escalated Cases p. 34
• Third-Party Escalation p. 35
• Servicer Compliance p. 37
• Resolution p. 37
• Suspension of Foreclosure Sale p. 37
• Summary p. 38
• Chapter 6 Consequences p. 39
• Deficiency Liability p. 39
• Tax Liability p. 40
• Principal Residence Exemption p. 40
• Qualified Debt Exemption p. 41
• Debt Forgiveness Exemption p. 41
• Insolvency p. 41
• Bankruptcy p. 42
• Credit Reporting p. 42
• Summary p. 43
• Chapter 7 Conclusion p. 45
• Appendix A Request for Mortgage Assistance p. 49
• Appendix B Hardship Affidavit p. 57
• Appendix C Dodd-Frank Certification p. 61
• Appendix D IRS Form 4506-T p. 63
• Appendix E IRS Form 4506T-EZ p. 67
• Appendix F Short Sale Notice p. 71
• Appendix G Acknowledgment of Request for Short Sale p. 81
• Appendix H Non-owner Occupant (Tenant) Certification p. 87
• Appendix I Third party Authorization p. 91
• Appendix J Escalation by Third Party p. 95
• Appendix K Making Home Affordable Programs p. 97
• Appendix L Scam Avoidance p. 99
• Appendix M Glossary of Terms p. 103
• Index p. 113
• About the Author p. 117