What is a Short Sale?

Short Sales

A Short Sale occurs when the Seller of a home needs to sell their home for less than what is owed to their mortgage company.  How does that happen? The bank or banks must agree that it is in their best interest to forgive the debt of the seller instead of other options. What are some other options? Well, foreclosure is an option used most.  The cost to foreclose on the property may be greater than granting a Short Sale, so often, the banks will agree. The biggest problem is that banks are overwhelmed with short sale requests, and processing these requests take time. The process starts in the loss mitigation department, sometimes called the HOPE department.  The HOPE department will request financial information from the seller and other supporting documents to determine the seller's ability or inability to repay the debt. Often, the bank will only accept a Short Sale application when it is accompanied by a Sales Contract with an estimated HUD-1 (settlement statement).

Short Sales tend to be more successful when the borrower has a true hardship and must sell.  The other requirement is that the Sales Contract reflects a sales price at or near market value. That doesn't mean you can't get a discount or closing help!  The bank will order an appraisal to verify the value of the property and consider their options.

The Loss Mitigation case worker does not make the decision for approval.  They only package the information for their supervisor to present to the decision makers. A common reason for the delay is an incomplete application package. Using a Certified Distressed Property Expert (CDPE) in navigating through this paperwork intensive process, will increase your chances of success.

If you are experiencing trouble making your mortgage payments, find out what your options are and what resources are available to you. For a confidential interview, call Art Eustace at (240)793-4554. Your privacy is assured.