How To Do a short sale in Kihei,
Kahului, Lahaina, Wailuku or Wailea, Maui.
Having a hard time making you mortgage payments?
These days, you hear plenty of stories about families that are losing their homes in Wailuku, Kahului, Kihei, Wailea and even Lahaina. Most people don’t want to face up to the reality, until foreclosure sets in, and that can harm your credit, or worse give you a huge tax burden. You can contact your bank and renegotiate the length of the mortgage or interest rate, which may lower your payment amount. If you are really having a problem with your payments and you have good credit you may want to do a short sale.
Your first step is to hire a Realtor.
List your property for sale with a reputable Maui Real Estate company and send a brief letter to all mortgage holders, giving them permission to speak with your Realtor. Otherwise, privacy laws will prevent them from talking to your agent.
What do I do, if there’s more than 1 lender?
If there are a first and second mortgage or a home equity line of credit, you may have to talk to more than one lender to get approval for a short sale. The presence of two lenders makes a short sale more complicated since it’s often the lender holding the second mortgage that has to absorb most of the loss.
Who should I contact at the bank?
Be sure you call the bank’s loss mitigation department, which will be the group to decide whether, or not to accept a short sale. Finding the decision maker is often one of the biggest hurdles in doing a short sale.
What information will the bank need to decide whether to accept a short sale?
The short sale submission package should include W-2 forms from employers (or a letter explaining that you are unemployed), bank statements, two years of tax returns, and other documents outlining income and debt obligations. In addition, as a short seller you should submit a “hardship letter,” explaining the circumstances that make it impossible for you to pay the full amount of the loan
What financial or credit liabilities will I have as a result of a short sale?
Many lenders ask you to sign a promissory note for all or part of the difference between the proceeds of the short sale and the debt obligation as a condition to a short sale. In such cases, the note gives lenders the right to sue a seller and attach other assets if the note is not paid when due. Having a portion of a loan forgiven may adversely affect a seller’s credit.
What tax liabilities will a seller have as a result of a short sale?
One often over looked aspect of short sales is that a seller must count any amount forgiven by the lender as income and pay taxes on that income, even if no actual money was received. The IRS requires lenders to submit a Form 1099 stating the forgiven amount. Sellers who meet the Internal Revenue Service definition of insolvency will not have to pay taxes on the forgiven amount.
Home ownership is your right and please remember that you have friends in the real estate industry that may be able to assist you in these tough times.
For more information contact:
Certified Residential Specialist
Howard Dinits (R)B
877-434-6487 or via e-mail Howard@EasyMauiRealEstate.com
How To Do a Short Sale in Kihei, Kahului, Lahaina, Wailuku or Wailea, Maui.