Frequently Asked Questions and Foreclosure Resources in New Jersey

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What is a Distressed Property?

* Property that is poor physical condition.
    * Property that is or will soon be in some stage of the foreclosure process
    * Property owned by a person who is experiencing a period of financial instability
    * Property on which the mortgages total an amount higher than the current value and an owner
      must sell  

What Could Cause a Homeowner in Distress?

In todays economic climate there are many factors that can cause a homeowner to find themselves in distress.

1. Payment increase or mortgage adjustment
2. Loss of income due to job loss or underemployment
3. Business Failure
4. Damage to Property (lack of insurance and inability to make repairs)
5. Death of a Spouse
6. Death of Family Members
7. Severe Illness
8. Inheritance (beneficiary unable to cover bills, utilities, maintenance of property)
9. Divorce
10. Separation
11. Relocation (inability to support two households)
12. Military Service (extended active duty)
13. Property tax increase
14. Reduced income
15. Too much debt
16. Property Value Decline

What is the Difference between a Short Sale vs. Foreclosure?

What does it mean when a homeowner is "Short" on the closing?

When a borrower owes an amount on the property that when combined with closing costs and commissions, is higher than the current market value.

A Short Sale occurs when:
A negotiation is entered with the homeowners mortgage company or companies to accept less the full balance of the loan at closing. A buyer closes on the property and the property is sold "Short".

A Foreclosure occurs when:
There is a legal proceeding by the lien holder in which they take back the property in order to recover the amount owed by the homeowner.


What are the Requirements Needed to Do A Short Sale?

There are a few factors that lenders are looking for to see if you could qualify for a short sale. Please call us to discuss your personal situation. Even if you feel you may not qualify, there might be other options available to you.

Financial Hardship
When we submit your short sale package to your lender(s) we will include a hardship letter from you. This could be anything from a significant adjustment in your mortgage payment due to interest rates, a job loss, too much dept, business failure, medical disability or you owe too much on the property than what it can be sold for.

Monthly Shortfall
This is another qualification that we will need to address to your lender(s). They want to see that you cannot afford to pay your mortgage. That is why we have created a simple financial worksheet for you to fill out to demonstrate your hardship.

Insolvency
This means that you do not have the means to pay down your mortgage. However, please realize you do not have to be broke in the eyes of the lender. The lender realizes that you have other financial obligations as well including living expenses.

Do I need to talk to a tax consultant before I do a short sale?
Yes! We strongly urge you to consult both an attorney as well as a tax consultant before you do a short sale. Every situation is different and it is important to know all ramifications of a short sale to your future tax liability. If you do not have an expert, we can help refer you to some great professionals who can help.

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Marsha Bowen Washington
Marsha Bowen Washington
Realtor