All About Short Sales

Despite the slow upswing of the national economy, one in every 789 housing units in Illinois received a foreclosure filing in 2014, according to an article published by Bankrate.com. While the national average of struggling homeowners is much higher, at one in every 1,232, Illinois still ranks in the top 10 states with the highest foreclosure rates. Underwater borrowers have alternative options to foreclosure, including a short sale of their home, which involves a sale of the property for less than the balance owed. Nevertheless, consumers should consider all the options and contact an experienced Arlington Heights short sale attorney before moving forward with any decisions.

Disadvantages of a Short Sale

A short sale can be beneficial to both buyer and seller. The former homeowner is able to avoid the foreclosure process, and the buyer is able to find a home well below the market value that is likely not distressed. Nevertheless, short sales are not always a saving grace and not for everyone; below are a few issues that should be considered before moving forward with this alternative to foreclosure.

·           Short sale does not equal spared credit – contrary to popular belief, a short sale isn’t necessarily better when it comes to affecting credit scores. In fact, it shows up as “not paid as agreed” on a person’s credit score, just like foreclosures and deeds-in-lieu of foreclosures, according to MyFICO, a consumer credit reporting website.

·           Even after a short sale, a seller may owe the bank  - known as a “deficiency judgment”, short sales do not necessarily automatically cancel the remaining balance owed on the loan from the bank.

·           If the balance is forgiven, a borrower may owe taxes – the government may consider any amount remaining on the loan by the lender income and, consequently, require payment of state and/or federal income tax. Federal law may allow the exclusion of the amount forgiven in a short sale, but only if specific requirements are met.

·           Other options are available  - short sales often require a lengthy approval process and much sweat equity without a guarantee that the sale will go through. Sellers should consider other foreclosure alternatives such as loan modification, deed-in-lieu of foreclosure, and/or refinancing, before embarking on the short sale process.

·           Short sale approval can be difficult – if there is a second (or third) mortgage on the property being sold, the loan is covered by insurance, and/or other creditors hold liens on the property, approval will likely be needed for all properties prior to short sale approval.

Short Sale Help in Arlington Heights

If you or someone you know is facing foreclosure and considering a short sale as a viable option, contact an experienced and knowledgeable Arlington Heights short sale attorney to learn more about whether or not a short sale is the best alternative. The attorneys at the Law Offices of Gilbert C. Schumm have over three decades of experience counseling homeowners in the greater Chicago area, including Arlington Heights, Palatine, Mt. Prospect and Hoffman Estates. Don’t face foreclosure alone. Call (847) 559 – 9109 today to schedule your initial consultation. 

SunTrust Reaches $320 Million Settlement for Delayed Loan Modifications

Earlier this year, SunTrust Banks and federal prosecutors reached a settlement agreement after an investigation into the bank servicing practices found chronic delays in approving loan modifications, according to an article published in the New York Times. The almost $320 million SunTrust bank will be required to pay will go toward housing counseling services, as well as consumer relief. Thousands of consumers may be affected by this negotiation settlement. If you or someone you know is struggling to keep up with mortgage payments, contact a Mt. Prospect loan modification attorney today for an initial consultation on your rights and obligations.

Home Affordable Modification Program

The time-intensive investigation conducted by federal prosecutors and investigators from several branches of the federal government found that Atlanta-based SunTrust Bank delayed processing applications of struggling homeowners; additionally, SunTrust Bank was found to have made misrepresentations to financially strapped owners seeking loan modification. Just like other large banks in the United States, SunTrust Bank was issuing modifications through the government’s Making Home Affordable Program (MHAP). MHAP was designed to keep underwater homeowners from losing their real estate by modifying the terms of the original loan.

Details of the settlement agreement are specific and targeted at numerous issues including restitution, education, and government refund. Particular details of the settlement include SunTrust providing between $179 million and $274 million in consumer restitution, $20 million being placed in a fund dedicated to distributing dollars to organizations that provide housing counseling services for consumers, a $10 million payment being made to Fannie Mae and Freddie Mac, and $16 million being forfeited to the Treasury Department. According to the government, of the approximately 26,000 borrowers who applied to SunTrust for a loan modification, thousands will be eligible for relief.

In response to the settlement, SunTrust Bank conceded to deficiencies in administering the federal loan modification program and assured the public it has implemented changes that will improve efficiency and transparency.

We Are Here to Help

Loan modification is complicated. If you or someone you know is facing foreclosure, contact a Mt. Prospect real estate attorney today to learn about your rights and obligations during the loan modification process. The attorneys at the Law Offices of Gilbert C. Schumm have decades of experience providing legal guidance in all types of real estate transactions. Contact the firm today at (847) 559-9109 to schedule your initial consultation.