Fort Lauderdale Real Estate Short Sale Information – Avoid Losing Your Fort Lauderdale Real Estate Home Or Condo To Foreclosure
June 4, 2008
So you’ve fallen behind on your mortgage. You need to sell your home or condo but you owe more than it’s worth. You’d like the enlist the help of a real estate agent and an attorney to help you but you don’t think you can afford to pay either of them.
You are being hounded by people saying they can help and all you need to do is sign a few documents and everything will be taken care of.What are your options? Who can you trust? Your auction date is coming fast and you might lose your Fort Lauderdale real estate home or condo to foreclosure. What do you do?
See Related Story: An Open Letter To All Fort Lauderdale Real Estate Area Homeowners In Foreclosure
Well, one of your options is to find an experienced and competent real estate agent who can show you how a short sale may help you.
What is a Short Sale?
A short sale occurs when a property is sold AND the lender agrees to accept a discounted payoff, of the mortgage secured by the property to facilitate the closing of the transaction. This means that the lender will agree to accept less than what they are owed in order to clear the defaulted loan from their books.Contrary to popular belief, the homeowner need not be in default and the property need not be in foreclosure. We believe it makes the lender more responsive if the homeowner is in foreclosure, but it is not a requirement for proposing a short sale.
Why are banks motivated to accept Short Sales?Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can get rid of the property without a huge loss, they will do it.Secondly, lenders know they could lose a lot more money if the property goes to auction.
How do you get the Bank motivated to take a short sale quickly and easily?You must grasp several different factors. First you need to understand how banks operate, their mortgage lending policies and guidelines and how they make loans. This is critical information that you need to understand when you are attempting to execute or negotiate a short sale.The better your understanding is as to the workings of the lending system, the better you will be able to influence the decision making process of the short sale. Banks don’t want to own property and most mortgage lenders only care about the numbers. The bank knows that if a loan goes into default they can expect to spend as much as 25% or more to write off that debt. In simple terms, banks expect to lose that amount of money on a certain number of loans they make.
The reason is it’s already calculated in their lending model.Another strong motivator for banks to entertain short sales is that having too many bad loans can cause an external auditor to come in to review the overall health of the lending operations of the bank or mortgage lender. If a bank has too many defaulted loans on its books it can negatively affect their future lending capacity.
Rather than the bank having dollar-for-dollar lending power the external auditor can really restrict their lending capacity. Restricting a bank’s lending capacity reduces the amount of loans a lender can make which in turn drastically reduces its overall profitability. An auditor may decide to drastically increase the bank’s reserve (the amount of cash they must keep on hand to protect their depositors).
Florida Foreclosure Laws
Florida carries out foreclosures through court proceedings in equity. The foreclosure process in Florida on average can take about 5-6 months but can be shorter or longer depending upon defenses asserted or lack thereof.
A foreclosure is a legal event and there are benchmarks that must be met. Once the case is turned over to attorneys, the impending foreclosure must be advertised, usually in the local papers and in the largest and closest metropolitan daily. The entire process can take a very long time from initial default to the actual public auction of the property.
Pre-foreclosure Period
A foreclosure in Florida begins when a lender files court action and records a notice of a pending lawsuit (Lis Pendens) against the borrower. The lender notifies the borrower and any other affected parties of interest in person or in some cases by mail or publication that the lawsuit has commenced.
If the borrower does not respond to the court action within a specified amount of time, the borrower may be found to be in default and the lender can ask the court to make a final ruling. If the court rules against the borrower, the ruling in the form of a Final Judgment will be recorded and include the total amount owed to the lender and the foreclosure sale date.
Judicial Foreclosure
In Florida, all mortgages are foreclosed in equity. The court order or Final Judgment of foreclosure will specify how the foreclosure must take place, and the foreclosure must take place on those terms.
Notice of Sale / Auction
The sale date is typically 20-35 days after the court ruling of the Final Judgment, but this may vary depending on the individual court and any legal maneuvers made by the borrower to defend the action. A notice of sale containing the location, date, and time of the sale must be published once a week for two weeks, with the second notice appearing at least five days before the sale.
The clerk usually oversees the sale, which ordinarily occurs at the county courthouse at 11:00 a.m.on the sale date. The winning bidder must provide a 5 percent deposit and pay the remaining balance by the end of the day or by a time as designated by the Clerk of the Court. After a successful sale, the clerk gives a Certificate of Sale to the winning bidder.
The law in most states gives the homeowner every opportunity to stop the process leading to foreclosure, right up to the minute that the auctioneer’s gavel comes down and sometimes even beyond. In some states there is a period after the foreclosure during which the homeowner can redeem the property (right of redemption.).
In Florida there basically is is no such “redemption period”. The borrower can stop the foreclosure up until the date of the sale and prior to the Certificate of Sale being issued by paying the total amount owed to the lender.
Once the sale (auction) takes place, the homeowner / borrower can only redeem the property by paying the balance as indicated on the Final Judgment in certified funds prior to the Certificate of Sale being issued.
Within 10-20 days of the sale, depending upon the work load of the clerk, ownership transfers to the winning bidder if no one disputes the sale. In most instances, a borrower has no right of redemption after the Certificate of Sale is issued.
It is important to note that the lender may obtain a deficiency judgment in Florida. A deficiency judgment is what a lender may obtain that gives the lender the ability to recoup losses incurred by selling the property at auction.
That is to say if the final judgment, or what the borrower owes the lender, is more than what the property is sold for, the lender may obtain an additional judgment for the balance. This could be a staggering number. For instance:
Final Judgment: ………$350,000.00
ess Auction Sale Price: $275,000.00
= Possible Deficiency Judgment of $75,000.00
A properly presented Short Sale proposal can alleviate this burden for the homeowner and is a big reason for a homeowner seeking the short sale route in avoiding a foreclosure. Additionally a foreclosure on your credit report in most instances is a lot worse than having avoided a foreclosure by means of a short sale.
Short sales are not by any means easy. They are also very, very time consuming and you as a homeowner are going to have to participate and make an effort to be successful. Just as the homeonwer had to apply and submit documents to obtain the loan, the bank is going to want to see some proof that it is true that the homeowner can now not afford the loan. They are also going to want to know what happened to put the homeowner in the hardship that they are in that has caused them not to be able to pay.
If a short sale is to be successful, it is best that you have a very experienced and competent real estate agent working for you. My team of professionals have been successfully completing short sales for years. In fact my team has been responsible for actually training thousands of real estate agents across the Country how to do short sales correctly.
Before you ask an agent to help you, find out their credentials. Ask them to PROVE to you that they know what they are talking about. Make sure they did not take some 2 hour course and become a short sale expert overnight. Let them know you want references of the cases they have worked on.
Ask them for a sample short sale package. Ask them to show you listings of homes that they executed short sales on that are now still on the market as well as those that closed and most importantly how many of those that they represented eventually got taken back by the bank.
You are going to want to know that you are not dealing with a “Johnny Comelately” real estate agent who took a late night short sale infomercial class. If you have any questions I will consult with you free of charge. One of the members of my team is an attorney here in the Fort Lauderdale real estate area. If you choose to work with my short sale team you will have legal representation in Court as well as a staff working to execute your short sale.
Whether you contact me or anybody else, please do contact someone if you are in foreclosure. The banks are not going to stop their proceedings and you will most assuredly lose your Fort Lauderdale real estate home or condo if you do nothing and the sheriff will evict you from your home.
Don’t stick your head in the sand. Do something to try and either save your Fort Lauderdale real estate home or condo and your credit rating.
I and my team are here to help and your privacy is of the utmost importance to us. It would be our pleasure to work with you if you are in foreclosure and we have the relevant experience to handle your case.
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If you are interested in learning more about buying a home or condo in Fort Lauderdale or anywhere in South Florida; or if you need any information about the Fort Lauderdale real estate market, please feel free to contact me and it would be my pleasure to assist you.You can contact me at the number shown below or please feel free to contact me by the form below and I, or one of my assistants, will be sure to get right back to you within a few hours, if not sooner.
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Robin Sing-Cunningham
robins@robinashley.com
Access USA Realty
Local Fort Lauderdale | South Florida : 954-709-7461
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Barry Johnson: bjohnson@robinashley.com