Short Sales

A Short Sale is a negotiation process which permits a homeowner to sell their home for less than what is owed.

Will the bank pursue me for the differences I owe?

It depends on the type of loan on the property (recourse or non-recourse) and where the property is located. We negotiate with our client’s best interest in mind and always seeks a release of future liability in writing from the lender.

Does a “hardship” have to be present for a Short Sale to occur?

Yes, a Short Sale is for people suffering financial and/or personal hardship(s). A Short Sale is not simply an escape from a bad investment or an ill-suited loan, a true hardship must exist. Lenders are placing an increased focus on whether a true hardship exists. We help our clients submit a compelling hardship letter to demonstrate the difficult hardships that exist for our clients.

Can I sell my property for any price?

No, lenders research comps in the area and will generally not accept an offer that is below the market value. In general, if your lender believes it is better off financially to foreclose, it will do so. A lender can also proceed to foreclose if the borrower does nothing, submits an incomplete Short Sale packet, or submits unreasonable low offers. 

Will I get any money from a Short Sale? 

Not usually. Most lenders will not allow a borrower to receive any money from the transaction because the lender is taking a loss. If the lender thinks you are getting paid from the sale, they will terminate the Short Sale.

Will a Short Sale hurt my credit? 

When a Short Sale is completed the words “Short Sale” do not appear on your credit report. However Lenders can report the sale in a variety of ways, including “Paid Settled”. If you are late with your payments, your lender will likely report this and your credit would be affected.

Should I keep making mortgage payments if I pursue a short sale?

Yes, you are responsible for making your mortgage payments while your home is on the market.

Short Sale Alternatives 

In determining the best option for a distressed homeowner it is important to understand the options available. Remember, time is of the essence. 

Foreclosure
If no action is taken the property will most likely be taken by the lender through a foreclosure auction. This option would negatively impact any future loan applications and credit ratings.

Refinance
This option permits a property owner to replace their original mortgage with a new one. This option requires that the property owner qualify for a new loan and may also include a higher interest rate and possibly a prepayment penalty.

Reinstatement
Requires a property owner to make a payment of the entire defaulted amount as well as interest and late fees. This option may also require the payment of attorney’s fees and taxes.

Loan Modification
A request to the existing mortgage company to adjust the loan terms to make it more affordable (i.e. extend terms of loan, refinance etc.)For this option the property owner is generally required to demonstrate the reason for the late payments has been remedied.

Forbearance
In this option the existing mortgage company permits the property owner leeway in bringing the defaulted loan current. It may take the form of extra time allowed to pay overdue payments in return for the promise to make regular payments in the future.

Deed in lieu of foreclosure
The property owner essentially gives the property back to the bank instead of proceeding with a foreclosure. This option would negatively impact any future loan applications and credit ratings.

Bankruptcy
This option can liquidate debt and postpone a foreclosure sale. Lenders may impose requirements as to property condition and tax status.

Sale of the property
If a property has equity the property owner may sell the subject property without lender approval through a conventional sale. If the amount owed on the property is more than the property's value a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender.

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