Category: Short Sale Attorneys

How Have Rising Real Estate Prices Affected Short Sales in Illinois?

Real estate market prices will continue to increase throughout the year, and sales are forecasted to decrease. In February, for instance, the median price in Illinois rose, but homes in the state still sold rapidly despite a sparse inventory.

At this time, the increase in real estate prices slowed, but the industry remained competitive. A short sale during this time may yield the same results that it would in a stable economy, but expect a faster sale. Experienced Illinois short sale attorneys can help you set up a short sale quickly and efficiently.

What is a Short Sale?

A short sale is a transaction in which a homeowner or borrower agrees to accept less than the mortgage amount they owe to a lender. Some lenders can forgive the difference, but if yours doesn’t, ensuring you get a reasonable price for your short-sale property is essential.

It is still preferable to foreclosure, especially if you are behind on your mortgage payments – you may be able to qualify for another mortgage once you can apply for one again. With the real estate market remaining competitive and rising property prices, a short sale can be a blessing in disguise for you.

If you could not make regular payments because you lost your source of income during the pandemic, a short sale can yield better results when real estate inventory is low and property prices are high. Your price for a short-sale property lies comfortably in the middle. It is neither too expensive for buyers nor too cheap for sellers (you).

Inflation and Short Sales

The housing market was already experiencing short supplies and high demands before the pandemic, and its arrival aggravated it further. Many renters found searching for affordable housing rugged, while homeowners looked for opportunities to sell high and increase space. As the demand increased, homeowners preferred to remain in their homes rather than sell them, which limited the number of sellable properties.

Prices are expected to increase throughout the year, and the number of sales may decrease. In February 2022, homes sold rapidly due to low inventory and high demand. During this time, the median price rose by 6.4% compared to last year.

For home sellers, especially those that place their property on a short sale, inflation is a good development. The value of your home rises as the property of goods rises. With demand high and supply low, investors and renters look towards short sales to get properties below market price even if it is higher than standard short sale rates. With experienced Illinois short-sale attorneys in your corner, you may be able to get a better price.

In this market, investors who invest in property as a leveraged asset have little choice but to pay the same fixed rate even if property values rise.

Contact Covert Marrero Covert LLP for A Consultation Today!

Whether it is on a short sale or not, selling a home is one of the most significant decisions you can make as a homeowner. It would be best to have experienced Illinois short sale attorneys in your corner with extensive knowledge about the current market rates, such as those at Covert Marrero Covert, LLP. Our attorneys have years of experience guiding clients through complex real estate processes that may otherwise lead to costly mistakes. Contact us for a consultation today!

Short Sale – A Necessary Defense to Stay Away from Foreclosure

It may not be ideal to lose your home, but it is always better to lose your home while it still has some value and can help you get rid of the impending debt. A short sale is an important term in the real estate industry. It is a way of avoiding foreclosure, by selling the property earlier, and often at a lower value. This only works out if the lender agrees to it, as you must present financial circumstances that help the lender realize that it is the best solution. Here, we describe some benefits of a short sale that you can get by seeking the advice of an experienced real estate attorney.

Benefits of Short Sale

A short sale happens when the lender allows the owner to sell the home at a value smaller than the debt incurred on the property. It has the following advantages over a foreclosure:

Protecting Credit Record

Although a money lender can initiate legal proceedings to recover the amount lost in a short sale, most banks will settle with the delinquent borrower. This is especially true in instances where the borrower has clearly shown financial hardships, such as a divorce or loss of income due to a failed business or lost job.

Best Result for Lender

A short sale is also a great option for a lender as well, as they receive compensation for failed debts. A foreclosure is costly and may not always bring the price that the borrower owed the lender. The process to foreclosure requires that the lender sends you several notices, prepares legal representation and then wait for you to respond in the court. It is advised that you obtain legal representation for assistance with this benefit, by showing the relevant financial details to your lender.

Controlled Process

The foreclosure process can be hectic for you as a homeowner. You receive mail and documents almost every day and it is easy to make mistakes. On the other hand, a short sale is a controlled process. You can seek the help of a real estate attorney and ensure that you identify a smooth ground with your lender. A short sale also requires documentation, but the involved processes are much simpler and work like a typical house sale.

Be Relaxed

Not being able to pay back a loan produces depression and anxiety. Staying away from a lengthy legal process will help you channel your energies and try to change your current financial situation. A short sale allows you to swiftly reach an agreement with your lender and a chance to move on during a tough financial time. This means that you must seek the support of an experienced real estate lawyer to help you prepare a short sale.

Good for Agents

Real estate agents love to help homeowners who want to proceed with a short sale. Many realtors specialize in helping clients buy and sell short sale homes. This means that they will be willing to work with you to increase their branding in the area.

The ideal legal help will ensure that you achieve success as a homeowner in trouble. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.

Situations that Makes You Eligible for a Short Sale

Difficult times create financial problems for most homeowners, and in such circumstances, a short sale may seem to be the most viable option at their disposal. If you are in a similar situation, you should consider consulting with a short sale attorney who can provide legal guidance and enlighten you with the pros and cons of going for a short sale. They will also explain any other options you may have to overcome your current circumstances, verify the legal soundness of the short sale documents, and provide advice about personal liability after the process is complete.

In a short sale, you need to get approval from your lender to proceed with the process. This is because generally, you get a lower price for the property than what you owe, and you need consent of the lender that they will accept the less settlement amount for your mortgage debt or seek deficiency judgment after the short sale has been finalized.

Qualifying for a Short Sale

Before you can proceed with a short sale, you need to qualify for it by getting approval from your lender. Lenders want a seller to provide genuine or legit reason that they have no choice but to short sale their property. Here are some requirements you must meet to be eligible for a short sale:

  1. The Market Value of your Property Has Dropped

If the drop in the market value has decreased the worth of your home lower than the mortgage debt, you can request for a short sale to settle the outstanding amount. However, if there is still some unpaid balance, you may have to pay a prepayment penalty.

  2. Financial or Other Forms of Hardship

You must submit a letter of hardship to your lender, explaining why you are unable to pay your mortgage payments and have to short sale your home. Most people have a vague idea about what constitute as hardship in the eyes of a lender. A few examples of hardship include divorce, bankruptcy, medial emergency, unemployment, and sudden illness. Examples of what does NOT constitutes as hardship are pregnancy, buying another home, unhappy with the neighbors, and bad purchase decisions.

  3. Defaulting on Mortgage Payments

If you are not current with your payments, you may be able to qualify for a short sale. The lender will evaluate your financial situation and may want to try out a few alternatives before agreeing to the short sale.

  4. You Have no Assets

Lenders request a copy of a financial statement or tax returns to determine whether you have any significant assets that can be liquidated to cover the shorted difference. If there are such assets, then the lender is likely to reject your application or seek deficiency after the short sale has been finalized.

Working with an experienced short sale attorney can help you better negotiate the terms with your lender. Your attorney will scrutinize the documents and make sure the lender is not tricking you into signing anything that may affect you in the long run. If the lender has agreed to waive off the deficiency judgment verbally, your attorney will make sure it is also in black and white so that they cannot come after you to claim it. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.

Common Problems and Obstacles with Short Sales

When homeowners are behind their mortgage payments, lenders are left with no choice but to serve them a foreclosure notice. While you may have several options at your disposal, the best way about your situation is likely to be a short sale. It is a great way to settle your mortgage debt, while allowing you to avoid foreclosure altogether. However, the short sale process is not as easy as it may seem—you may encounter some problems that may hinder and delay the process. It is best to know about them beforehand so that you are able to overcome or avoid these issues.

Getting Junior Lienholders to Accept the Short Sale Amount

To obtain a clear title for your property following a short sale, it is essential for the principle lender to get releases from all junior lienholders. If there is a tax lien, a judgment lien, a second mortgage, HELOC, or any other lien on the property, it must be signed off by the respective lienholder, along with the first mortgage lender. However, getting all the lienholders to agree on the payoff amount is extremely difficult, as everyone is looking to get more money than offered by the principle lender. This can lead to delays in the process and even drive off potential buyers.

Delays and Errors in Documentation

Another common reason homeowners are unable to close deals on short sales in incomplete or incorrect documentation. This may include the documents not dated and signed properly, missing, or not get drawn up in time. Any problem with documentation automatically puts the process on hold, delaying it for days or even weeks. It is best to get all the required documents in order a few days before the closing deal and have a real estate attorney carefully review them.

Unreasonable Timeline Expectations

Short sales are generally faster than any other real estate transaction, though it can take anywhere from several weeks to a few months. Since its quite rare for a lender to accept the first offer, uninformed sellers and buyers expecting a quick turnaround are likely to get frustrated and give up on the deal before the sale of the property is approved by the lender. But the good thing is that most major banks and reputed lenders have streamlined their process, making it easy for homeowners to easily and quickly acquire approval for a short sale.

Lowball Offers

Most buyers are interested in a short sale because they are looking to strike a ridiculously low offer from the seller. However, banks have investors and shareholders to answer for their investments in distressed properties, and expect to get maximum return. Your lender will likely to outright reject any lowball offers that you may present for approval. That is why you should never submit such offers to the lender to avoid wasting time. Instead, only submit those offers that are closely match to lender’s desired sale price.

Short sales may not be as simple as they may seem like, and involve several legal intricacies that you must be aware about to avoid any potential problems with the process. It is recommended that you work with an experienced and reliable real estate attorney to ensure you are do not make any mistakes and stay on track with your short sale. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today. We have offices in Schaumburg, Warrenville, and Naperville, Illinois.

Understanding the Role of Hardship Letters in a Short Sale

If you are a homeowner finding it difficult to make regular mortgage payments, you may want to consider a short sale for your home. But for executing a short sale, you need to get approval from your lender. The process can be initiated by writing a hardship letter which comprises of details about your reasons of going for a short sale.

What is a Hardship Letter?

A hardship letter is an essential part of documentation when you are making an application or request for a short sale to your lender. The letter provides the lender a clear picture of your current situation and what circumstances led to your financial difficulties. This letter should have sufficient evidence, such as bank statements, a financial statement, tax returns, pay stubs, and any other documentation that can support your case.

The final decision of your lender is influenced by several factors, aside from what reasons you have presented in your hardship, especially their own financial concerns. However, most government short sale programs and lender programs require homeowners to demonstrate their financial hardship in order to explain their inability to make mortgage payments, and why they think a short sale is the most viable option.

What Constitutes as “Hardship”

Hardship is defined as a situation that is beyond an individual’s control, and results in circumstances where a mortgager is unable to afford mortgage payments. There are several situations that may cause hardship and qualify for a short sale consideration by your lender, including, but not limited to:

  • Energy-Environmental costs
  • Excessive obligations
  • Fraud
  • Illness of principal mortgagor or a family member
  • Incarceration
  • Job relocation
  • Military Service
  • Natural disaster
  • Payment adjustment
  • Payment dispute
  • Property problems (construction litigation, roof leaks, etc.)
  • Reduction in monthly income
  • Separation or divorce
  • Servicing problems
  • Transfer of ownership pending
  • Unemployment

 

Important Parts of a Hardship Letter

When writing a hardship letter to your lender, make sure to include the following:

  • Your complete contact information, such as your address, phone number, loan number, and address of the property you want to short sale (if you are living in a different house)
  • A request to your lender in a respectful and polite way, asking them to give approval for a short sale of your home
  • A complete explanation of your current situation and the circumstances leading to the hardship, and also include the timing of the incident
  • Tell the lender what steps you have taken to cope with your situation
  • Acknowledge that your attempts have not worked and the only way for you to keep your home from being foreclosed is to go for a short sale
  • A short paragraph explaining that you have tried your best to make timely payments and that you wanted to keep the property, but due to the circumstances, things have not worked out well for you
  • A sentence or two for thanking the lender for considering your request

 

Lastly, make sure to attach all relevant documentation that can support your hardship and the request for a short sale.

The entire process of getting approval for short sale and executing the short sale is complex and riddled with legal hurdles. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.