mortgage short sale
Mortgage short sale refers to property sold for less than is owed on the loan. When properly constructed, short sales are mutually-beneficial to all parties involved. Borrowers are able to sell their property for less than is owed on their loan. Banks are able to recoup most of their investment, and buyers can purchase real estate below market value.
Obtaining mortgage short sale approval is not an easy task. Industry experts state nearly 90-percent of requests are denied. Few borrowers understand the process or possess negotiation skills to convince lenders to accept a discounted price.
Engaging in the short sale process is similar to undergoing an IRS tax audit. Borrowers must provide numerous financial documents to prove financial insolvency. Lenders typically require a list of income and expenses, previous years’ tax returns, pay stubs or unemployment records, credit card statements and banking records.
Mortgage short sales are usually handled by the lender’s loss mitigation department. A loss mitigator is assigned to work with the borrower throughout the process. Their primary role is to mediate between lenders, borrowers and buyers.
Loss mitigators are employees of the bank and do not make final decisions to approve or disapprove short sale requests. However, they can be fundamental in helping borrowers obtain approval. It is not uncommon for mitigators to be verbally abused on a daily basis. Remember, this agent is available to help you, not make matter worse. Being nice to the loss mitigator can go a long way in achieving a successful outcome.
Borrowers should organize financial documents prior to contacting their lender. Compile a list of income and expenses and compose an explanation of events which caused you to fall behind in payments. Loss mitigators appreciate working with individuals who are prepared and organized.
Most mortgage lenders require borrowers to submit a short sale hardship letter. This letter can be instrumental in whether your lender will grant or deny approval. It should be concise, yet provide sufficient details and dates of events leading to financial downfall.
The hardship letter should also include any actions taken to reduce expenses. This might include eliminating the use of credit cards, transferring utilities to a budget plan, or shopping at discount stores. Lenders frown on borrowers who claim to be broke yet spend money on vacations, dining out or other unnecessary expenses.
A mortgage short sale is an alternative to foreclosure. However, it is important to obtain a Payment in Full agreement from the lender. When banks accept payment in full, they release the borrower from owing additional monies.
Some lenders require borrowers to pay the difference between the sale price and loan amount. When borrowers are unable to pay this amount in full, banks issue deficiency judgments. This judgment remains on credit reports until fully repaid.
Payment in full mortgage short sales remain on credit reports for seven years. If debtors are able to overcome financial challenges, they can apply for another home loan within a few years.
If you are having difficulty making mortgage payments, talk to your lender about entering into a short sale. Take time to become educated about the process and what is involved. If necessary, retain the services of a real estate attorney or short sale specialist.
Simon Volkov specializes in helping borrowers obtain mortgage short sale approval. To date, Simon and his team have been involved in nearly 400 successful short sale transactions. Simon is the author of “Short Sale Hardship Letter eBook Course” and hundreds of real estate articles are published on his website at http://www.SimonVolkov.com.
Mortgages : How Does a Mortgage Short Sale Work?