New York, Short Sale Attorneys

Why Hire an attorney for a Short Sale?

Because it is free to all sellers. In the case of a short sale, we get the bank to pay our legal fee for representing the seller. We can also help you qualify for the cash for keys program. This program can get sellers $ 3,500 or more just by having us work with their bank during the short sale process.

Defaulting on mortgage payments can be a difficult situation. Many people find themselves falling into default, or are already in default, and don't realize that there are options available before the bank takes the house away. A short sale is an excellent way to avoid foreclosure and can offer you more time to live in your home, free of mortgage payments. In certain situations we can also offer a homeowner creditor protection as well. Remember, a short sale can work for you as long as it is done properly by a qualified attorney.

b. A Short Sale or Short Pay is when the lender agrees to accept a sales price of fair market value for your property despite the loan or loans totaling more than what the property is worth.

c. In this scenario, the lender takes a loss on the property and writes off the difference between what was owed on the property and the final real estate short sales price. In most cases, the lender takes less than what is owed on the property to fully satisfy the loan.

1. WHY WOULD A CONSUMER/BORROWER WANT TO DO A SHORT SALE?
Short Sales are a benefit to consumers because they stop mortgage foreclosure and prevent the lender from suing for deficiency. Deficiency is the difference between what the lender would have received under the contract and what the property finally sells for. This shortfall is often more than $100,000. By entering into a voluntary agreement with the lender, you ultimately stop foreclosure and your credit report does not merit a FORECLOSURE entry. This puts you in a much better position to qualify to buy another property in the future.
Through our negotiation process, the lender agrees to forego suing you for any monies which they write off associated with the Short Sale transaction.

A Short Sale transaction also provides peace of mind and predictability because you know exactly when the sale will close, and thus when you will need to vacate the property. There's no risk that sheriff's deputies will come to your door one morning to evict you.

2. WHY WOULD I HIRE A REAL ESTATE ATTORNEY TO DO A SHORT SALE FOR ME?
Negotiating a Short Sale is a difficult process, generally because the lender will require certain documents and information, but too much information or documents in the wrong format can completely destroy a transaction. Specifically, the lender will require documents demonstrating the property value, and then will verify such value with a broker’s price opinion or “BPO”.
Additionally, the lender will ask for financial information about the borrower. The borrower must now convince the bank that they are insolvent and simply cannot make the payment going forward. Think of it as a backwards loan application. It is important to give the lender precisely what they want at this stage without lying (often including bank statements and tax returns), but also paint a grim picture of the borrowers financial circumstances

This stage is the most sensitive because the borrower must prove they do not NOW have the income to make the payments, but at the same time the borrower must be careful not to implicate themselves in mortgage fraud from when they applied for the loan and “proved” to the lender they DID have the income to make the payments. It is critical to be properly represented through this process by a qualified Short Sale attorney…for your own protection!

3. WHAT ARE THE TAX IMPLICATIONS OF A SHORT SALE?
The tax situations of individual borrowers are different, but in general, any 1099 income generated by a Short Sale is usually offset by the loss the borrower took on a bad investment. Often, critics of Short Sales look only at the 1099 income without considering the benefit of the offsetting deduction for the loss on the property.
The bottom line on taxes is that the tax year in which the borrower completes the Short Sale is a complicated one, and it is critical to have a Certified Public Accountant prepare taxes for that year. It is easy to miss the deduction. Don't let it happen to you. The Law Offices of Castiglia-Rubinstein & Associates can refer clients to a qualified tax professionals, within our own office, who can properly prepare such returns after a Short Sale.

More than five million households are behind on their mortgages and risk foreclosure. The government’s $75 billion mortgage modification plan has helped less than 4% of them. Consumer advocates, economists and even some banking industry representatives say much more needs to be done.

For the administration, there is also the concern that millions of foreclosures could delay or even reverse the economy’s tentative recovery — the last thing it wants in an election year.

To bring the various parties to the table — the homeowner, the lender that services the loan, the investor that owns the loan, the bank that owns the second mortgage on the property — the government intends to spread its cash around.

Under the new program, the servicing bank, as with all modifications, will get $1,000. Another $1,000 can go toward a second loan, if there is one. And for the first time the government would give money to the distressed homeowners themselves. They will get $1,500 in “relocation assistance.”

Should the incentives prove successful, the short sales program could have multiple benefits. For the investment pools that own many home loans, there is the prospect of getting more money with a sale than with a foreclosure.

For the borrowers, there is the likelihood of suffering less damage to credit ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for an unpaid mortgage balance. For communities, the plan will mean fewer empty foreclosed houses waiting to be sold by banks. By some estimates, as many as half of all foreclosed properties are ransacked by either the former owners or vandals, which depresses the value of the property further and pulls down the value of neighboring homes.

If short sales are about to have their moment, it has been a long time coming. At the beginning of the foreclosure crisis, lenders shunned short sales. They were not equipped to deal with the labor intensive process and were suspicious of it. Now with the government intervention of the current administration, short sales are more widely accepted and welcomed.

What Do I Need to Know When Considering a Short Sale?

While every case is different, you should be prepared to deal with the following:

• What is your home worth?
• How much can you afford to pay monthly?
• Are you currently behind on your mortgage?
• Is your income going up or down?
• How long do you need to stay in your present home?
• How can I save my credit?
  

Determining If a Short Sale Is Right for You

The lawyers at Castiglia-Rubinstein & Associates can help you navigate the financial waters. If your mortgage is in the arrears and you are struggling or unable to make your mortgage payments a short sale may be your best option. If you are late or in default on credit card, medical,insurance, or utility bills, filing for Chapter 7 or Chapter 13 bankruptcy may be your best option. If you want to save your home you may want to request court intervention with a Settlement Conference Hearing. This will allow you to tell your story to a judge with your attorney and your bank present. If you don't want to lose your home through foreclosure, you can also explore the possibility of a short sale with your bank.