If you are in a situation where you:
- Are starting to get behind on your mortgage payments;
You are losing sleep over trying to pay your mortgage and you are experiencing a true hardship; like you lost your job, or a health issue arose unexpectedly, or the unfortunate life event, like a divorce...
Or, perhaps, you are upside down on your mortgage; you owe more now, since the market has corrected and your equity is down, or your interest rate adjusted/increased;
Then a Short Sale is Appropriate. For example,. Suppose you owe $350,000 on your mortgage. You have met with an agent who has put your house on the market and the best offer you get is $330,000. After closing costs and real agent commission you will be short the amount you need to pay off your loan.
What is recommended is to approach your lender and explain your situation. Now, this takes tenacity and patience when you are talking to lenders and banks. Make sure you have all your mortgage documents in order and explain that you are interested in a short sale process. Every lender is different, so follow their advice and more than likely you will fill out the forms and hardship letter/package. While you have them on the phone you may want to ask if they will accept your net sale proceeds (the only offer you have received) as payment in full.
Now, you could have your real estate agent initiate the short sale process, but you will have to give them permission and share some personal information like your social security number. This will ensure that they will be able to discuss your mortgage on your behalf. The agent (if they have processed short sales) will need to draft a hardship letter/package and provide a contract of sale/offer to the lender. Just be clear, that the lender will only consider a short sale if the hardship is indeed genuine and the near future will not allow you to make the payments.
If this describes you and your home, please contact me. I will set up an appointment with you to explain, in person, how I may be able to help you. Call: 443-786-0200
Another example of a short sale may involve a loan from a third party. For example, your family member may provide you with a loan or gift letter in an amount that is reasonably close to the loan-payoff amount, the lender may accept this as payment in full. If the bank accepts this amount, you keep your house.
What your Lender Considers
Before agreeing to accept a short sale, your lender must first determine if the offer received on your house is the best obtainable. Second, its need proof that you are unable to pay off the loan deficiency (the difference between the amount owed and the amount offered.)
The lender looks closely at your income and expense statement. This financial statement must be supported by a hardship or "short sale" letter spelling out the special circumstances causing you to fall into arrears. You will need to explain how those changes or events impaired your ability to make payments. Finally, you must explain why you don't think your situation will improve in the future. If your lender accepts a short sale, it writes off any balance. Assuming that there are no junior liens (such as a second mortgage), you are free from your mortgage obligation.
More Short Sale Info.
What is recommended is to approach your lender and explain your situation. Now, this takes tenacity and patience when you are talking to lenders and banks. Make sure you have all your mortgage documents in order and explain that you are interested in a short sale process. Every lender is different, so follow their advice and more than likely you will fill out the forms and hardship letter/package. While you have them on the phone you may want to ask if they will accept your net sale proceeds (the only offer you have received) as payment in full.
