Short Sale Q&A

Short Sale Q&A

What Is a Short Sale?

RaftA Short Sale is the process by which a homeowner can sell their house for less money than he actually owes on the mortgage(s). This is done by the buyer or investor providing proper documentation to the mortgage lenders to convince them to reduce the mortgage balance to allow the sale. The mortgage lender (or bank) actually takes a loss (or write-off) on the mortgage because the value of the home has fallen below the mortgage balance AND the homeowner is in a poor financial condition that will not allow him to continue to make his mortgage payment as originally agreed. If the bank approves the discount on the mortgage, the home can be sold for a lower price with the possibility of the seller not having to come up with cash to cover the shortfall.

For What Type Of Situation is the Short Sale Your Best Option?

Most short sales are done on properties in which the owner is “upside down”. This means they typically have negative equity or no equity in the home. In other words, the total balance owed on the mortgage is equal to or greater than the price at which the house can be sold. The homeowner must have some type of financial hardship that is preventing him from paying the mortgage. This is commonly job loss, medical bills, disability, or some other hardship.

How Does a Homeowner Benefit from a Short Sale?

It relieves the stress of being in foreclosure or the worry about possibly going into foreclosure and being hounded by the mortgage lender; and it allows homeowners to eliminate their mortgage payment and move on with their lives. If you have stopped making the payments on your mortgage, a Short Sale allows you to stop the foreclosure and get a fresh start. A Short Sale also prevents additional damage to your credit as compared to going through a foreclosure proceeding.

Why Would a Bank or Mortgage Lender Want to do a Short Sale?

Banks lend money and try not to take back foreclosed properties which is a long and expensive process. The house is a non-performing asset and banks try to limit these "toxic" assets in order to reduce their liabilities. With a short sale, the lender can cut its losses in a shorter period of time than taking back the property and all the associated costs.

What Will a Short Sale Do to My Credit?

A short sale is less damaging to your credit than a foreclosure because it shows up on your credit report as a deficient mortgage. It also tells future creditors that you took care of your obligation in a structured settlement rather than having negligently walked away from your loan.

What are My Other Options?

You can sell your home through normal channels and pay the deficiency in cash. You can also bring your mortgage current by making up the missed payments and paying all penalty fees. There's the option of refinancing your mortgage with another lender. You can engage in a foreclosure defense action or declare bankruptcy. Regardless of your direction, it's important to seek out the advice of a Real Estate Attorney to help you assess which option is best suited for you.

How Long does a Short Sale Take to Complete?

A Short Sale takes approximately 60 to 90 days to complete and sometimes longer.

What Paperwork am I Responsible for Filling Out?

There is some paperwork involved but most of the forms are completed by the Short Sale Negotiator

You must complete the following: (1) A Borrowers Authorization form for each mortgage allowing the Short Sale Negotiator to speak with the lenders about the Short Sale. (2) A letter detailing the financial hardship that caused you to fall behind on your mortgage. Any other proof of your financial hardships such as bank statements, medical bills, pay stubs, termination letters, etc. should also be included.

What Happens After I Complete the Short Sale Package?

Once completed the entire Short Sale package to the lender. The Lender will then arrange an appraisal (called a "BPO") to determine the value of the property. Upon receipt of the BPO, the bank will negotiate the details of the Short Sale and, after several weeks, they will either approve or deny the final offer. If approved, a date will be selected to close the transaction.

Contact Information

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The Tublitz Advantage
RE/MAX Services
6070 N Federal Highway
Boca Raton FL 33487
Dan Direct: 561-289-0289
Linda Direct: 561-289-0288
Fax: 561-908-6899