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More Short Sale Information


Did you know?
  • From JAN 2004-JAN 2006 27% of consumers purchased homes with less than 5% down payment.
  • 19% of buyers purchased home with ZERO down payment.
  • 31% of all Mortgages issued in this same timeframe were to consumers that utilized some sort of alternative lending program.

The Term “Short Sale”

Short Sale is defined as a Lender agrees to accept a discounted pay-off.
The Lender may agree to release the property upon receipt of less than what is actually owed on the loan.
NOTE: The Seller could be in pre-foreclosure

Why Would the Bank say YES?

Banks do not want to take the property because:

  • The Neighborhood has depreciated.
  • REO property condition is normally poor.
  • Bank shareholders are concerned when there are too many defaulting loans on the books.
  • An REO is a liability, not an asset. Too many liabilities can cause a lender to go out of business.

Banks don’t want to be in the property management business.


A short sale relieves the consumer from a negative equity situation/foreclosure.
The remaining debt does not disappear. (including any Homeowner Association dues, Property Taxes, etc.)
The Credit Report will state “paid off-settled”.

  • No real negative impact to credit report if payments have been paid on-time until date of sale.

If there are mortgage late pays, they will be reported to depositories and will remain on the credit report for 7 – 10 years and considered derogatory.

What Happens to the Remaining Debt?

Seller may still owe the money. The Lender may pursue a deficiency judgment and can collect in the same manner as any successful judgment holder. These may include: Liens on other properties owned and Garnishment of wages.
Remember, a debt which is forgiven is taxable income. The seller(s) may receive a 1099 and they would have pay taxes on the amount reported.
For more information about a Short Sale give Earl a call :770-377-5793 or drop me a line:EARL@EARLPARK.NET

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