Frequently Asked Questions
· What is a Short Sale?
A Short Sale is the sale of a home when the net proceeds do not fully pay off the existing mortgage loan(s) and the Mortgage Servicer is willing to accept a discounted payoff. The closing costs that are typically paid by the Seller are paid out of the proceeds from the sale, including but not limited to, commissions, escrow and title fees and any negotiated Buyer’s cost. Your home is sold and you avoid foreclosure.
· Why would any Mortgage Servicer accept less than what is owed on a mortgage?
Mortgage Servicers are in business to lend money, not to own real estate. They do not want the expense of the foreclosure process and/or the holding and maintaining of the property if it does not sell at foreclosure. The foreclosure process is very expensive and time consuming, so many lenders will agree to what seems a loss on the mortgage when they will actually save money by not completing the foreclosure and holding the property in their portfolio.
· If I do a Short Sale, how much will I have to pay to sell my home?
In most cases, you will not pay any sales costs if your Mortgage Servicer approves the Short Sale. All commissions, title and escrow fees, and some repair expenses are paid by the Mortgage Servicer, Investor or Mortgage Insurance company, if applicable, as part of the Short Sale approval.
· What sort of hardship would my lender consider legitimate?
To some extent, that will depend upon the Mortgage Servicer considering your Short Sale request. Below you will find a list of common “hardships” that may be accepted by Mortgage Servicers:
• Family illness or injury
• Job relocation
• Job loss or significant income loss
• Divorce or split of domestic partners
• Death of a spouse
• Adjustment in mortgage payment or unforeseen increase in living expenses
• Too much debt
• Military service
• Family illness or injury
• Job relocation
• Job loss or significant income loss
• Divorce or split of domestic partners
• Death of a spouse
• Adjustment in mortgage payment or unforeseen increase in living expenses
• Too much debt
• Military service
· Do lenders approve all Short Sales?
No. That is why it is critical to work with someone, who has extensive experience at getting Short Sales approved and has direct contact with Mortgage Servicers.
· I have a second mortgage on my property, so can I still do a Short Sale?
Yes. it is possible and common to work with the Mortgage Servicer that holds the second mortgage, (many times the same Mortgage Servicer holds the 1st and the 2nd loans) to put together a Short Sale transaction. It is very important however, that you let your Real Estate agent know if you have a second mortgage, home equity line of credit (HELOC), or any type of lien against your property such as a Home Owners Association lien, tax lien or mechanics lien.
· My property is in rough shape and needs work; can I still do a Short Sale?
Absolutely, Mortgage Servicers often take into consideration repair costs, as a factor, when determining whether to approve a Short Sale offer.
· I am concerned about my credit, so how will a Short Sale affect my credit?
The goal in a short sale to avoid foreclosure. Consult your attorney to verify how this may affect your credit.
· Can I receive cash from a Short Sale?
No, the Short Sale is only designed to get you out of your mortgage debt rather than going through the entire foreclosure process. It is not a refinance option and you will be vacating the property, as you would, if you were going through foreclosure. However, there are particular government programs, depending on several factors, that you may or may not qualify to participate in that are designed provide limited cash to offset moving expenses and/or rental down payments. These programs would need to be discussed with your lender at the time the short sale was initiated.
What if my home is not worth what I purchased it for?
This is the typical scenario for a short sale, when you can only sale it for less than it is currently worth.
· What if I have filed bankruptcy?
You will need to check with your Bankruptcy Attorney to verify if you can proceed with a Short Sale.
