Short Sales

In these times, when people are faced with forclosure caused by job/income losses, a weak economy, divorce, rising adjustable mortgage rates, and illness it is helpful to know the steps the homeowner should follow to pursue a Short Sale instead of going into forclosure. A short sale occurs when the owners/sellers do not net enough money and equity from the sale of the property to pay off all mortgages, fees, liens, and closing costs. They are "short" when they go to the closing table. A short sales does not impact the owners credit rating as dramatically as a foreclosure. There are factors to consider, such as the potential that the owner could still owe the difference shorted in the sale or the amount, if forgiven, could be considered taxable income. An owner/seller should follow these steps to engage in a short sale.
-Obtain name, address, telephone number, and e-mail address of their lender's loss mitigation contact person, and the best time to reach him/her.
-Get specific directions as to what requirements need to be met from the lender's loss mitigation contact.
-Ask the lender to send a short sale packet, so the paperwork can be started.
-Complete paperwork and/or write a letter giving your consent for the lender to release short sale information to specified people who will need it. Also, the owner may be asked to write a letter describing what caused the current hardship situation.
-Owners will be required to complete a current financial statement.
-Owners may be asked to submit pay stubs, a copy of their listing agreement (if the property is listed) and bank statements.
-If there are other known lien holders against the owners, besides the mortgage company, the owners must make contact with these lien holders. All parties must be contacted and made aware of the short sale.
-If the lenders refuse to release for "no consideration," see what other options are available
-Secondary lien holders have few options and need to cooperate. The homeowner will be responsible for maintaining the property until it is sold and the property closes. The short sale process usually takes a minimum of 6 to 8 weeks. Once the short sale is approved by the lender, the homeowner will execute all documents that are necessary for selling the property, including listing agreements, purchase agreements, and closing documents, even though all sales proceeds will be going to the lender/lien holders.