Is Short Sale Right for You?

Chances are you or someone you know is facing the possibility of foreclosure. Today, 1 in 3 homeowners in America has a mortgage that is underwater.

These are turbulent times. Now more than ever, it’s important you know all your options. Foreclosure can be avoided, your credit can be saved, and your financial future can be salvaged. A short sale can be an excellent solution for homeowners to avoid foreclosure, allowing you to sell your home for less than what is owed on the mortgage. In the past, it was rare for a bank or lender to accept a short sale. Today, however, due to overwhelming market changes and the foreclosure debacle, banks and lenders have become much more flexible when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved. There is more good news for underwater home owners. The nations’ largest mortgage lenders are now offering relocation assistance programs to qualified home owners. Allowing you to exit your home gracefully.

Here is the definition of a short sale:

  • A short sale occurs when an agreement is reached between you and your mortgage lender (or lenders) and you accept less than the full balance of the mortgage at closing. Thereby allowing the property to be ‘sold short’ of the total value of the mortgage.
  • The lender will agree to allow you to sell your property for today’s fair market value usually for far less than you owe on the mortgage.

For homeowners to qualify for a short sale, they must fall into the following circumstances:

  • Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  • Monthly Income Shortfall – In other words: “You may have more in monthly payments than money” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  • Fair Market Value –A real estate fair market value analysis, more commonly referred to as a comparative market analysis (CMA), is a detailed report examining the homes currently on the market, under contract, recently sold and recently expired, withdrawn or canceled to determine what a property is worth in the current market. A real estate agent often prepares a real estate fair market value analysis at no cost.

Short Sale Timeline:

Day 1-7: Intake Stage -file is received, opened in the system, title is ordered & reviewed

Day 7-20: Processor will request any outstanding documents to be submitted to the bank

Day 20-45: Short sale package and contract are submitted to the bank, bank acknowledge receipt

Day 45-60: BPO is ordered and completed

Day 60-90: Bank accepts, counters or reject the short sale offer

Day 60-120: Banks starts the negotiation of any counter offer and send to investor for final approval

Day 60-120: Bank issues a final written approval detailing the terms of the short sale, to be signed and accepted by seller

Day 120-150: Closing stage the bank send approval to closing department for final approval the deed is transfer by the seller to the buyer, short sale payoff is sent to the bank based upon agreed price.

Seller FAQ’s

What is a Short Sale?

A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of debts secured by liens against the property and the property owner cannot afford to repay the liens’ full amounts, whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties.

A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the creditor and borrower. While credit is also typically damaged much less than from a foreclosure, both often result in a negative credit report against the property owner.

How do I stop foreclosure?

Foreclosure defense can delay the case from moving forward and an Emergency Motion to Cancel a foreclosure sale date is very effective if the case has progressed. Bankruptcy can help if all else fails.

How do I qualify for relocation money from the bank?

Each lender offers different incentive programs. Most major lender participate in HAFA (home affordable foreclosure alterative program) HAFA guarantees a waiver of deficiency in addition to $3000.00 in relocation money.

What happens to the mortgage deficiency?

Some lender/bank may forgive the difference between what you owe and the short sale price. This is called a waiver of deficiency

Could I have IRS tax consequences based on the forgiveness of my mortgage debt?

You may be eligible for the “Mortgage Forgiveness Debt Relief Act of 2007” exemption or you may have a tax consequence on the mortgage amount forgiven by the bank. We highly recommend you seek advice from an attorney or tax professional.

Who pays the delinquent HOA fees?

The bank will generally pay 6-12 months of delinquent HOA dues as part of the short sale proceeds.

Who pays the delinquent property taxes?

The bank will generally pay the delinquent property taxes out of the short sale proceeds in most cases.

Understanding your options now could mean all the difference in your financial future. If you would like more information on how to qualify for a short sale, please contact Short Sale Innovations for a free consultation 866.548.9421 or

After the Short Sale

Short Sale Innovations has a partnership with The Homeowner Assistance Division of The Law Office of Paul A. Krakser, PA offering many services to help you build and restore your credit and help you get back on the path to homeownership.

HAD also offers legal service in the area of foreclosure defense, debt settlement, deficiency settlement, deed in lieu, bankruptcy services and credit restoration.  Please call for a free homeowner’s solution consultation toll free 877-332-1965.