A short sale can take 45-150 days, on average, to close. Every bank is different
and has its own internal processes. The following is a timeline that outlines a
simple short sale.
Short Sale Process and Timeline;
Property is Listed
Foreclosure dates are verified
Authorization and Required Documents are obtained from the seller
 We can not start the short negotiations without a complete file. All
documents must be provided before the file will be accepted.
Offer is Received (1-30 days if not offers are received then price
adjustment is necessary)
Short sale package is completed and sent to the bank(s)
 Fax confirmation is received
 Notes are published to website for authorized parties
Banks are contacted to verify receipt of short sale package
 Confirmation can take 3-15 days from original send date of package
Banks are contacted to verify package is complete and no additional
documentation is needed
 These calls are made weekly until a negotiator is assigned
 When any items are needed or need to be updated, agent and
homeowner will be contacted
Banks orders BPO/interior valuation
 This will assist the bank in determining whether or not the offer is
within fair market value
 This process can take 2-3 weeks
 The bank is called weekly until verification of values have been
received
Negotiator is assigned (can take up to 60 days to get to this point)
 Depending on workloads and bank policies it can be 30-60 days or
longer before a negotiator reviews the package for a decision.
 Negotiator is contacted for status updates weekly
File goes into review with the Negotiator
 Bank issues approval, counter offer or decline at negotiator level
 If additional terms are requested additional negotiations will take place
Bank issues final approval (usually 90-120 days)
Escrow period begins
 Usually 30 days longer until close of escrow

CONTRACT TO CLOSE SERVICES
Short Sale
191 Sand Creek Rd, Ste 100 Brentwood, CA 94513
Background of Short Sales
Lenders began to accept short sales in the 1990s with the onset of sub-prime
lending. Homeowners who qualified for their loans with less than perfect credit,
little or no money down have been pressured as the market values declined and
have found that when personal finances were not able to make the commitments of
the monthly mortgage payments (loan default) for various reasons, the value of the
home was not enough to pay off principle balance, late fees, attorneys fees or
closing costs. Since foreclosing on a home can cost a lender upwards of $50,000
each property and take more than 9 months in some cases, short sales are a more
cost and time effective alternative. On average savings to the lender can be more
than $15,000 and 6 months time.
Short Sales
A short sale (also known as a short payoff) occurs when a lender or lenders accept
a discounted payoff on an existing mortgage, with $0 in closing for the homeowner,
to avoid the cost of a foreclosure. In other words, when a homeowner owes more
than can be collected through a Real Estate sale, a short sale allows them to sell
their property to avoid a foreclosure for themselves and the lender.
If the seller has other assets or is employed, the lender might choose to workout a
compromise sale, where a demand is submitted to escrow to allow the sale to close
but will require a note from the seller for the balance (or a portion of the balance).
This note may be secured by other property, or a personal note.
Benefits of a Short Sale
Homeowner: Provides homeowners with an alternative to the most
derogatory credit occurrence besides bankruptcy, foreclosure.
Lender: Lenders save time and money by negotiating short sales instead of
costly time consuming process of foreclosure.
Buyer: Provides purchasing opportunities that REO (bank owned) properties
can’t. Let’s face it, if you are willing to be patient through the approval
process, you can pick up great properties at below market pricing.
Future of Short Sales
It is predicted that short sales will only grow as an alternative to foreclosures.
Many of the risky lending practices that led to the housing boom in the late 1990s
through the early 2000s; 0% down payments, interest only loans, adjustable rate
“teaser loans” and loans that negatively amortize are fueling today’s mortgage
crisis and foreclosure wave. With no clear indication of a “bottom” to this
devaluation slide, it is foreseeable that there will continue to be more short sales
and foreclosures for some time coming.

CONTRACT TO CLOSE SERVICES
Short Sale
191 Sand Creek Rd, Ste 100 Brentwood, CA 94513
So, you’re facing foreclosure or considering a short sale….now what?? Try to look at the
situation without attaching your emotions. When viewing the situation from a strictly
business standpoint, you can more successfully analyze your options and determine
which might best suit your needs and desires and move you towards resolving your
financial difficulty. One very important thing to remember: Time is of the essence,
take action.
Know Your Options:
1. Refinance: Completely paying off the entire loan amount plus any default amount and
fees. Usually, this is accomplished through a refinance of the debt. New debt is a
normally higher interest rate and there may be a prepayment penalty if there has been
a recent default. With this option, you will want to make sure there is equity in the
home.
2. Loan Modification: Utilizing your existing mortgage company to refinance the debt or
extend the terms of the loan. This may allow the homeowner to catch up at a more
affordable level. To qualify, you must prove to the lender you have fixed the problems
that caused the late payment(s) or inability to continue to pay.
 Forbearance: Lender may be able to arrange a repayment plan based on the
homeowners financial situation. The lender may even be able to provide a
temporary payment reduction or suspension of payments. Information will be
required by your lender to show that you are able to meet the new payment
plan requirements.
3. Deed in Lieu of Foreclosure: Give the property back to the bank instead of the
bank foreclosing. Banks generally require the home to be well maintained, all
mortgage payments and taxes must be current. Most banks will ask the homeowner
to qualify for this option as they may not be able to collect on any mortgage insurance
policies.
4. Sale: If the property has equity (money left over after all loans and monetary
encumbrances are paid). The homeowner may sell the home without lender approval
through a conventional home sale. In this case, the homeowner will get cash from the
sale. On the other hand, a Short Sale (also known as a pre-foreclosure sale) can be
negotiated with your lender by a Real Estate Professional if what is owed is MORE than
the property value. (Please see following pages for more information)
5. Do Nothing/Foreclosure: If a homeowner does nothing, they most likely will lose
their home at a foreclosure auction. Loan applications generally ask if the applicant
has ever been foreclosed upon. Credit reports also disclose this damaging information.
Therefore, doing nothing is never the best option.
 Reinstatement: Completely paying the entire default amount plus interest,
attorney fees, late fees, taxes, missed payments and fees. This can be done at
any time up to 5 days prior to the Trustee Sale (foreclosure auction)
*Bankruptcy: This option can liquidate debt and/or allow more time. At this time it will
not stop the ability of the lender to foreclose, only postpone the process. PLEASE FULLY
DISCUSS THIS OPTION WITH A LEGAL PROFESSIONAL.
 Chapter 7 (Liquidation) Completely settle personal debt
 Chapter 13 (Wage Earner Plan) Payments are made toward a plan to
pay off debts in 3-5 years.
 Chapter 11 (Business Reorganization) A business debt solution.

The federal government has once again extended the tax credit! With mortgage rates at record lows we see out clients reaching FHA Purchases at 4.75% with no points on a 30 year fixed rate loan.

If you are looking to take full advantage of the aggressive interest rate market by refinancing your current home – we are seeing the European Debt crisis and the strength of the market bring rates to as low as 3.625% on conforming fixed rate ARMS and 4.75% on conforming fixed rate 30 year loans all with NO POINTS!

Keller Williams Realty
Judy Hazen
Owner/ Realtor
“Team Elite”
191 Sand Creek Road Ste 100
Brentwood, Ca 94513
Office: (925) 392-4131
Fax: (925) 634-4427
Judyhazen@kw.com
www.TeamEliteHomes.com

Prospect Mortgage
John King
Senior Loan Officer
203K Renovation Specialist
3461 Brookside Rd. Suite E
Stockton, Ca 95219
Office: (925) 809-3439
Cell: (925) 567-6116
Fax: (877) 556-6392
John.King@prospectmtg.com
www.johnmking.com

Mortgage Forgiveness Debt Relief Extended – Updated 04/13/10 On April 12, 2010, SB 401, the Conformity Act of 2010 was enacted. It allows taxpayers who had all or part of the loan balance on their principal residence forgiven by their lender to exclude the forgiven debt from California gross income. The new law applies to discharges of qualified principal residence indebtedness on or after January 1, 2009, and before January 1, 2013.

New law – Taxable years 2009 through 2012
California law conforms, with modifications, to federal mortgage forgiveness debt relief for discharges that occurred in tax years 2007 through December 31, 2012. The amount of qualifying indebtedness is less than the federal amount and California imposes a state-only limitation on the total amount of relief excluded from gross income. The following summarizes the differences between the federal and California provisions. Federal provision applies to discharges occurring in 2007 through 2012, and:

Limits the amount of qualified principal residence indebtedness to $2,000,000 for taxpayers who file as married filing jointly, single, head of household, or widow/widower, and to $1,000,000 for taxpayers who file as married filing separately.
Does not limit the debt relief amount; it only limits the indebtedness amount used to calculate the debt relief amount.
See the federal law Mortgage Forgiveness Debt Relief Act and Debt Cancellation for more information.
California provision applies to discharges that occurred in 2007 through 2012, and:

Taxable years 2009 through 2012
Limits the amount of qualified principal residence indebtedness to $800,000 for taxpayers who file as married/registered domestic partners (RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
Limits debt relief to $500,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, and to $250,000 for taxpayers who file as married/RDP filing separately.
Taxable years 2007 and 2008
Limited the amount of qualified principal residence indebtedness to $800,000 for taxpayers who file as married/(RDP) filing jointly, single, head of household, or widow/widower, and to $400,000 for taxpayers who file as married/RDP filing separately.
Limited debt relief to $250,000 for taxpayers who file as married/RDP filing jointly, single, head of household, or widow/widower, and to $125,000 for taxpayers who file as married/RDP filing separately.
How to File
Form 540 – Claiming mortgage forgiveness debt relief on an original tax return
You can file for debt relief on your original Form 540, California Resident Income Tax Return, or Form 540NR, California Nonresident or Part-Year Resident Income Tax Return.

If the amount of debt relief for federal purposes is the same as or less than the California limit, then no adjustment is necessary on Schedule CA (540/540NR).

If the amount of debt relief for federal purposes is more than the California limit, include the amount in excess of the California limit on Schedule CA (540/540NR) line 21f, column C.

You must include a copy of your federal return, including Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), with your original California tax return. There is no similar California form.

Form 540X – Claiming mortgage forgiveness debt relief for a previously-filed tax return
If you already filed your tax return, file a Form 540X, Amended Individual Income Tax Return, in order to claim debt relief.