What is a Cooperative Short Sale?

A Cooperative Short Sale, CSS, is a new initiative for lenders to cooperate with borrowers to sell their property in lieu of foreclosure.  Typically, if the home is a primary residence and the borrower does not qualify for a loan modification, the lender will offer a Cooperative Short Sale.  Typically, a Cooperative Short sale saves a borrower from foreclosure, allows them to stay in the property while it is being sold, saves them from foreclosure and compensates the seller for moving costs.  The lender (s) and borrower (seller) agree to a sale price allowing the property to be sold like a traditional sale without the unknowns of a typical short sale.

How do you make an offer on a short sale?

Short sales transactions are different from others in that a contingency is added to the contract whereby the seller's lender must approve a payoff that is less than the balance currently owed by the seller.  In some cases there may be other liens such as taxes, utilities, subordinate liens, HOA, Condo Assn, etc.  All liens must be cleared in order to pass a clean title free of liens and encumberances.

What defines a short sale property?

Short Sale Properties are defined in different ways but essentially more is owed on the property than the market will bring at the time a seller has it on the market.  The seller's lender or other subordinate liens must agree to take payoffs less than is owed.

In some cases, properties are advertised as not being short sales when in fact the seller owes more than the balance of the liens but the seller is able to bring funds to the table to make up the difference.

Is it true lenders are paying borrowers to short sale their home?

Yes, lenders are doing what is called "Cooperative Short Sales".  Borrowers that cooperate with the lenders are given around $2,500 plus avoiding foreclosure.  Note: a short sale doesn't always mean it will avoid a deficiency so if you owe more than your property is worth be aware of the details as you go through the process.  Remember foreclosure is not only costly for the lender but the borrower too as the deficiency can be much greater by the time the property is foreclosed.  Cooperative Short Sales ultimately benefit all parties to the sale.

Who do you represent in the short sale?

Gidget: I do not represent lenders.  I represent the seller and assist them with negotiating their short sale with their lender by coordinating between the parties for the best possible outcome for the seller/borrower.  In more cases than not it helps to have a third party involved in the short sale negotiations.  Let's face it...it's a lot to coordinate between working with not only the seller and their lender but the additional requirements the lender wants from the other parties to the contract.  Without someone to coordinate all the parties it would be difficult to get everyone to the closing table.

Strengthen America, find a way to keep homeowners in THEIR homes.

Think about it...taxpayers are paying paying paying...banks get bailed bailed - bailed and nothing helps the majority of folks keep their homes.  Homeowners are treated as if they did the big wrong when in fact they were the recipients of an approved loan with bank underwriting.  Most of the high risk loans went out the first two years of the mortgage crisis.  Now with the combined economic crisis and reduced income of many Americans, folks are not qualifying to keep their homes.  Many lost their jobs that originally qualified them for the loan and/or had their pay reduced, used up all their savings, some their retirement and finally ran out of ways to keep paying their high mortgage as the nations economic crisis continues.  This crisis is way bigger than the American Homeowner and in no way under their control.  So why do the banks get bailed out and the homeowners that pay the taxes are homeownerless (a new word to add to the American dictionary), becoming renters, told their loan balance cannot be reduced to keep their home and ultimately they must sell.  So how does this make sense?
Maybe in the beginning of this crisis you could convince a homeowner they did something wrong and needed to cooperate with the sale of their home to avoid foreclosure.  Today many are questioning who is really to blame and why there is "no hope for homeowners".   Once a homeowner is told they cannot keep their home, what compels them to continue paying their mortgage or cooperate with a short sale?  Some lenders are offering incentives for homeowner cooperation while other lenders are so overwhelmed with foreclosures they only file the foreclosure but forgo moving forward with the action until a future date.  For many homeowners this creates an incredible emotional trauma when they realize there is no hope left but to sell or be foreclosed.  Programs like HAFA (Home Affordable Foreclosure Alternative) offer a small incentive (like cash for keys in a foreclosure) for owners to cooperate with the short sale.  Lenders save money by doing a short sale in lieu of foreclosure which can be quite expensive.  Homeowners typically are allowed to stay in their homes and save money by participating in the program.
Now the reality check, homeowners realize they don't qualify to keep their homes and the lenders will reduce the mortgage for a new buyer but not them.  Many homeowners want to know why they can't keep their homes and qualify based on today's market values and their current income.   If banks need bail outs why not make it contingent upon them helping homeowners keep their homes?  Change the underwriting to make it work.

Strengthen America, find a way to keep homeowners in THEIR homes.