A short sale is when you can get your lender(s) to accept less than the total loan balance due. Not all lenders will agree to receive less than
the amount due and accept a short sale/ In addition, not all sellers or all properties qualify for a short sale.
If a borrower's house is worth less than the amount owed on the mortgage, the borrower may be able to use a short sale to settle the
mortgage debt. By completing a short sale, rather than allowing the house to be foreclosed upon, the borrower can transition to a new
place to live and avoid selling the house at a public sale or auction. In addition, depending on the circumstances, the borrower may qualify
for financial assistance to help with relocation costs.
Common reasons lenders will agree to a short sale:
- The mortgage is in arrears or in foreclosure stages
- The homeowner has hardships and cannot afford the payments
- New homes in the area are being chosen over existing homes
- The area or neighborhood has depreciated in value
- The lender’s shareholders are concerned when there are too many defaulting loans on the books.
- Some lenders are required to prove a loss each month…Let’s help them out!
- Some lenders are required to have an amount equal to or up to six times the retail value of each REO “on Hand”
- An REO is a liability, not asset. Too many liabilities will cause any business to go under if not dealt with quickly.
- Can I short sale a nice property? Absolutely! As you can see above, lenders will short sale a home for many reasons other than the
poor condition of the property.
A Short Sale is an alternative to foreclosure and may be an option if:
- You are ineligible to refinance or modify your mortgage
- You are facing a long-term hardship
- You are behind on your mortgage payments
- You owe more on your home than it’s worth
- You have not been able to sell your home at a price that covers what you still owe on your mortgage
- You can no longer afford your home and are ready or need to leave
What are the benefits of a Short Sale?
- Eliminate or reduce your mortgage debt
- Avoid the negative impact of foreclosure
- Start repairing your credit sooner than if you went through a foreclosure
- May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through
foreclosure (up to 7 years)
What is the process for a Short Sale?
If you qualify for this option, the process is similar to a normal real estate sales transaction. You will work with a real estate agent to
market and sell your home. However, your mortgage company will also be working with you and your real estate agent every step of the
way to:
- set the sale price (based on current market value),
- collect financial information and negotiate with other lien holders (i.e., your second mortgage company) if applicable,
- review acceptable offers,
- agree to the terms of the sale once a buyer is in place, and
- work with the buyer’s real estate agent and mortgage lender to finalize the sale.
In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses and to make the transition to
new housing easier. A Short Sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation. If
you are unable to sell your home, you may be able to transfer the ownership of your property to the owner of your mortgage (also called a
Deed-in-Lieu of Foreclosure).
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