In the short sale process, you sell your home and settle your mortgage debt for less than the amount owed. You may be eligible to sell your home in a short sale under the U.S. Treasury’s Home Affordable Foreclosure Alternatives Program (“HAFA”) if:
- You have a hardship, such as a job loss, divorce or medical emergency
- You owe more on the mortgage thanyour house is worth
- You’re unable to afford your current monthly mortgage payment
- You’re unable to modify your current home loan
If you qualify and want to move forward with a short sale, you should consult an attorney or a professional real estate broker/agent who is experienced in short sale transactions. See the “Basic Steps for a Short Sale” for a general idea of the process…but keep in mind that the steps may vary depending on the lender requirements and/or the advice of the real estate professional who will guide you through the process.
Basic Steps for a Short Sale Transaction
A real estate professional who specializes in short sales and is well-qualified can help you with these steps:
- Completing a property valuation analysis – lenders will only approve a short sale if the borrower owes more than the property’s fair market value.
- Contacting the Lender for a short sale application.
- Collecting all of the financial data and other information required by the lender – including a fact-based letter detailing borrower’s hardship and current financial situation.
- Listing the property for sale.
- Receiving and ratifying a purchase contract from a qualified buyer.
- Sending the purchase contract to the lender, along with all of the lender-required documentation (requirements vary from lender to lender).
- Being persistent, but patient – ideally, it should take 30-45 days for a purchase contract to work its way through the lender’s system, but the process could take longer.
These steps will need to be done for each lender that is involved and every lender has their own process. Some lenders that are in second position (2nd trust/mortgage) will only start processing their short sale after they’ve received written short sale approval from the first trust. This means that the overall short-sale approval process may take twice as long if there are two trusts/mortgages secured by the property.
Consult an attorney and/or a licensed tax professional to understand all your obligations relating to a short sale.
- Foreclosure Avoidance Resource: http://www.hud.gov/offices/hsg/sfh/hcc/fc/index.cfm
- Bank Resources:
This article provided courtesy of Old Republic Home Protection, a leader in the home warranty industry, providing superior service, comprehensive coverage and competitive pricing.
Source: http://shortsalehomewarranty.com/sellers/ retrieved on August 24, 2011
For more information on the value and benefits of home warranty coverage or to order a home warranty (also available for investment/rental properties and homes not going through a resale transaction), please contact local area representative Amanda Wood, serving Santa Barbara, San Luis Obispo and Kern Counties: