Home > Short Sale: How to Avoid Foreclosure
Are you falling behind on your mortgage payments?
Are you struggling to make your mortgage payment each month?
You may qualify for a Short Sale.
What is a Short Sale?
A Short Sale is a discount on the outstanding loan balance by the lender or lenders to allow the property to sell. The mortgage balance on the property exceeds what comparable properties are selling for.
Why would my Lender agree to a Short Sale?
No lender wants to foreclose on anyone. It’s a lot of work and nobody wins. A short sale often has a better return on investment to the lender than a foreclosure. The average savings a lender sees from a short sal e compared to a foreclosure is $50,000. Not only does the lender receive this savings, they are also paid on the loan much earlier than in a foreclosure process. Lenders created the short sale process as a foreclosure alternative for those reasons. The incentives to perform a short sale on your property are in place to motivate you to participate.
When should I consider a Short Sale?
Evaluate your current budget situation to determine if you can afford your monthly mortgage payment. Contact your bank to determine if there are options for you to modify your loan or work out a forbearance plan. If you realize that you can no longer afford your home, contact us immediately. Be proactive! Don’t wait until it’s too late for a short sale option.
How does a Short Sale affect my credit score opposed to Foreclosure?
Your credit score is used by credit card companies, auto lenders and many others to determine the rates you’ll be required to pay. A low score will cost you money in many other areas of your life for a long time to come. A short sale may cause less damage to your credit score than a foreclosure if the lender accepts the offer.
Typical Requirements For a Short Sale
1. The mortgage is in arrears or foreclosure. Some lenders may require that you are behind on your payments prior to them considering a short sale purchase offer.
2. The homeowner can show hardship and that they can no longer afford the payments. If you can prove to the bank that you have fallen behind or are about to fall behind on your payments due to job loss, pay reduction, illness, divorce or any other hardship, typically, they will consider a short sale.
3. Comparable properties in the area are selling for considerably less than what is owed. The Lender realizes that it is financially in their best interest to sell now than to foreclose.
Short Sale Package:
- Hardship Letter & supporting hardship documentation
- Pay stubs for the month.
- Bank Statement for the last 2 monthsTax Returns for the last 2 years
- W-2’s for last 2 years
- Third Party Authorization to Release Information
- Financial Statement
How the Short Sale Process Works
- List your home with Realtor
- Contact bank to request a hardship package.
- Complete the package and provide required documents (paystubs, bank statements, etc) to the Lender
- Price home to be competitive enough to bring offer to purchase in short time frame.
- Once offer is received, offer and supporting documents will be immediately submitted to Lender for consideration of Short Sale.
- Amount negotiated with second lien holder.
- Lender will order appraisal.
- Letter of acceptance of Short Sale provided by Lender which will state the amount accepted, deadline to close by, if deficiency will be forgiven.
- Purchaser is notified of acceptance.
- Private Inspection is conducted.
- Purchaser’s lender orders appraisal and processes loan.
- Closing scheduled.
- Closing takes place and immediate occupancy is given to Purchaser.
Although this can be an embarrassing matter, you can't afford to ignore it. Deborah understands the market and knows that job loss and increased variable mortgage rates are placing homeowners into unavoidable financial hardship. This makes it extremely difficult to afford the mortgage payments. There are options.
The first step is to contact your mortgage lender to determine if there is help for you to save your home. If it is determined that you can no longer afford your home, contact me immediately.
Deborah offers a Short Sale Seminar which covers the process of selling your home for less than what is owed to your lender. She has teamed up with and attorney, title company and mortgage company who specialize in short sales. This seminar will provide you with helpful information on how to avoid foreclosure and get your home sold!
Deborah specializes in the short sale of homes in cities such as Novi, Farmington Hills, West Bloomfield, Northville, Livonia, Canton and other areas in Western Wayne and Oakland county.
Learn about the Mortgage Forgiveness Debt Relief Act of 2007, click here.
Contact Deborah today for more information or for a private consulation, in person or over the phone.
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