Short-Sale Primer Part III

Here we are again. Thanks for following along. I have received quite a few questions from poeple about specific topics, and I can confirm that all of your questions will be answered in the course of this (rather long) treatise. Today, we discuss how to prepare yourself for a short-sale. Before we begin though, if you missed part I or II, here they are:

Arizona Short-Sale Primer Part I

Arizona Short-Sale Primer Part II

What, Exactly, Are We Preparing?

You need to prepare yourself in two ways, really, for a short sale. You need to prepare yourself mentally & emotionally, and also financially. Both aspects are critical. Like any challenge, you cannot simply go around it. You must go through it. Trying to avoid problems in life will lead you to a comfortable beach. Only, you won’t be lounging with a Mojito. You’ll be looking for a place to bury your head. First, let’s check your head:

Where’s Your Head?

Here’s the reality folks. I cannot in good conscious inform you that this will be a painless process. Yes, your credit score is going to take a hit, but we’ll cove that in depth later. More to the point is the emotional and psychological trauma of losing your home. Now, some of you out there may be saying, “Psychological trauma!? I’ve never even seen the home I’m losing to foreclosure. It’s an investment property.” Or, you might be trying to rationalize (FYI: The Step Before Acceptance) in this way, “Well, we’ll take a little hit for awhile, but we’ll be all right in the long run.” While I certainly applaud the positive attitude, take just a moment to actually acknowledge that losing a home, whether it’s an investment property or your “home sweet home” will be a troubling setback.  None of us, no matter how much we have in the bank, are immune to financial loss. Now, without getting too “mushy” here, let me just say this: Suffering this kind of loss can and WILL throw you into a bit of a psychological tailspin. Men, in particular, if they are facing foreclosure or serious financial setbacks, can be “emasculated,” so to speak.  One minute you’re riding high on the hog, things are looking great, the family is well, the kids are playing in the yard. The next thing you know, money’s getting a little tight. The credit cards come out more. Lor forbid, you have a mortgage that is adjusting upwards. Suddenly, there is real fear in the air, and you find yourself in a trap that you can’t, seemingly, get out of. Many of us have faced these issues. Believe me, when the mortgage and housing markets crashed (and the rubble is still settling), many of my formerly well-to-do friends and colleagues were happy as clams. Right now, I can count on one hand the number of my compatriots who are still selling real estate or loans. They are truly, truly, in trouble. And losing their own homes as well! Things to remember during this crisis:

1.  Most, if not all, truly wealthy men have declared bankruptcy at least once.

2. This too shall pass. . .

3. Your most powerful earning years are still ahead of you.

4. It’s happening to lots and lots of people. You are not alone.

Getting The Financial House In Order

Now, you’ve discovered that you are a prime candidate for a short-sale. What are you going to need? What is the bank going to want from you. The answer to these questions is fairly simple. You’ve got a financial hardship, right? That’s whay you’re doing this. Now you have to prove it. Remember when you were filling out the paperwork to get the loan on that fabulous new house? You made yourself look as good as possible.  You assessed and reported every nickle you could verify. You proudly paraded your credit score. It was like a first date. Gotta look good, right?! Well, this is exactly the opposite.  Now, you’ll need to very carefully document all of your expenses. EVERYTHING. Groceries, gas, insurance, child support, alimony, that repair to the car last month, all of it. The bank wants to get a clear picture of your economic hardship. You’ll turn over a lot of documents to help you support these assertions of hardship. Here are some tht you’ll need:

1. A hardship letter explaining the nature, cause, and extent of the hardship.

2. Copies of your last 3 month’s bank statements, for all accounts.

3. Copies of your last 2 month’s wage earnings receipts (check stubs).

4. Copies of any additional income receipts (support, disability, etc).

5. Copies of the last 3 year’s tax documents (W-2s, final tax workout forms)

These are a good start. These are almost always requested by a lender for a short-sale. 

Go to Part I of the Arizona Short-Sale Primer

Go To Part II of the Arizona Short-Sale Primer 

Go To Part III of the Arizona Short-Sale Primer

Go To Part IV of the Arizona Short Sale Primer

Go To Part V of the Arizona Short Sale Primer 

Until next time, if you have specific questions, please email them to me at abutler@realtybutlerhomes.com or call me at (602) 499 – 4798.  You can also visit our foreclosure resource center on the realtybutlerhomes.com webpage.

Legal Notice: The information contained in these articles is for educational purposes only, and should not be construed as specific legal advice. Readers are encouraged to contact legal counsel with questions regarding their own specific circumstances.

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