With the continued decline of real estate market values, many homeowners are finding themselves locked into mortgages with outstanding loan balances greater than the property’s present value. This puts these homeowners in a precarious situation, with several unattractive options. One option is that the homeowner can make up the difference out of his or her pocket. Since the shortfall can involve tens or even hundreds of thousands of dollars, this is not a viable option for most transferees. The second option is the transferee can walk away from the property and let the lender foreclose, but this will ruin the homeowner’s credit, make it impossible to obtain a new mortgage and make it difficult to even rent a home. The third – and “least bad” – alternative, for sellers and properties that qualify, is often to persuade the lender to agree to a short sale. This means that the lender has agreed to accept less than the total due on the outstanding mortgage. The short sale will have an adverse effect on the transferee’s credit, but not to the extent a foreclosure would.

If your company has offered an employee a position in a location that requires relocation, a short sale may be the only option for the employee to successfully complete the move. The short sale is negotiated among the buyer, seller and the mortgage lender around the relocation management company’s guaranteed buyout offer. If a short sale is indicated, a transferee whose company is working with TRC should follow this process:

Contact the lender. The transferee must identify and reach the person who is responsible for handling short sales and who has the authority to make decisions regarding short sales. The transferee should try to determine whether the deficit will be forgiven by the lender. This part of the process can be time-consuming.

Submit a letter of authorization to the lender. To permit the lender to disclose personal information, the transferee must submit a letter with his or her name, the date, the property address, the loan reference number and the real estate agent’s name and contact information. This letter should introduce the third-party relocation company that will provide the transferee with a guaranteed buyout offer. The letter should give the lender permission to talk with interested parties about the sale of the home. The next step is to complete a preliminary net sheet. This is an estimated closing statement showing the sale price the transferee expects to receive and all costs associated with the property sale. These costs include commission, unpaid loan balances, and outstanding dues and fees.

Submit a hardship letter to the lender. This is a statement of facts that discloses how the transferee got into this financial situation and makes a plea to the lender to accept less than the full amount of the mortgage. (The third-party relocation company can help validate the property’s market value by providing a guaranteed buyout offer.) Provide proof of income/assets. To provide the lender with proof that the transferee cannot pay the full amount of the mortgage without undue hardship, the transferee must fully disclose all assets of tangible value, including savings accounts, IRAs, money market accounts, stocks and bonds. The transferee must provide copies of bank statements to the lender, which will require complete account documentation, including an explanation of any money entering or leaving the accounts.

Obtain a comparative market analysis. If the transferee’s situation is the result of declining property values, he or she should document this. Specifically, the transferee should provide the lender with a comparative market analysis conducted by a real estate agent showing similar homes, active days on market, pending sales, and properties sold during the last six months.

Submit the purchase agreement to the lender. When the transferee has received a buyout offer, it is presented to the lender for consideration. Each situation is unique, but lenders are often disposed to let the relocation provider assume the burden of the inventory property. The lender cuts its losses and the relocation company assumes responsibility for marketing, maintenance and resale.

Report the income. If the lender does forgive the deficit between the mortgage balance and the sale (or acquisition) price, this is considered income by the IRS. As such it must be reported by the transferee.

Trying to find a relocation company to help relocate employees? Then visit the corporate relocation specialists at www.TRCGS.com. TRC Global Solutions provides domestic and international relocation services for business, government and military relocation.

Trying to find a relocation company to help relocate employees? Then visit the corporate relocation specialists at http://www.trcgs.com. TRC Global Solutions provides domestic and international relocation services for business, government and military.
http://www.trcgs.com

Author Bio: Trying to find a relocation company to help relocate employees? Then visit the corporate relocation specialists at www.TRCGS.com. TRC Global Solutions provides domestic and international relocation services for business, government and military relocation.

Category: Finances
Keywords: Employee relocation services,business relocation services,corporate relocation