Short Sale Process

Short Selling Your Property

A Short Sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds. You may also be eligible for the government's Home Affordable Foreclosure Alternatives Program (HAFA) which offers short sale and Deed-in-Lieu options.

Examples of true hardship are loss of job (either spouse if married), divorce, job transfer out of the area where you have to move, medical emergency, bankruptcy, or a death in the family.

Since you still own your home (on title), you have to make the decision and be serious about wanting to sell your home and rid yourself (and your family) from the mortgage burden. As such, the lender will require you to put together a very detailed financial package for submission to your lender. Each lender/bank has their own guidelines but the basic procedure is the same for each bank. Your short sale financial package will probably include the following:

Pulling together the information required above can seem daunting but if you commit to a short sale and take action today, you can pull this information together. Getting a jump on this is important due to the foreclosure timeline, especially if you have missed one or more mortgage payments.

What are the Benefits of a Short Sale?

A succesfull short sale will (1) eliminate or reduce your mortgage debt, (2) avoid the negative impact of a foreclosure, (3) start repairing your credit sooner than if you went through a foreclosure, (4) may be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years).

What's the Process for the Short Sale

What is the process for a Short Sale?, If you qualify for this option, the process is similar to a normal real estate sales transaction. You will work with a real estate agent to market and sell your home. However, your mortgage company will also be working with you and your real estate agent every step of the way to:, set the sale price (based on current market value), collect financial information and negotiate with other lien holders (i.e., your second mortgage company) if applicable, review acceptable offers, agree to the terms of the sale once a buyer is in place, and, work with the buyer's real estate agent and mortgage lender to finalize the sale., In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses (HAFA/Fannie/Freddie allow $3,000) and to make the transition to new housing easier. A Short Sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation. If you are unable to sell your home, you may be able to transfer the ownership of your property to the owner of your mortgage (also called a Deed-in-Lieu of Foreclosure).

What To Do Next?

Call your Mortgage company to see if you qualify for a loan modification. Gather your financial information - Make sure you have your basic financial and loan information on hand when you call your mortgage company. You'll need:, your mortgage statements, including information on a second mortgage (if applicable), your other monthly debt payments (e.g., car or student loans, credit card payments), and, your income details (paystubs and income tax returns). Explain your current situation - Be ready to outline your current hardship and explain why you are having trouble making your mortgage payment, the reasons why this is a long-term problem and inform your mortgage company that you want to sell your home to avoid foreclosure. Your mortgage company will need to understand the reasons why you are having difficulty in order to find the right solution for you

Your mortgage company wants to help you avoid foreclosure and, in most cases, will be willing to work with you. The biggest mistake you can make is to wait any longer to take action.

Once you are approved for a short sale, call us at 707-297-6580 so we can assist you with the financial package (noted above) and outline a detailed plan for marketing your home for sale.

HAFA - Home Affordable Foreclosure Alternatives Option

If you are facing foreclosure and have been unable to modify your mortgage, you may be able to get help under the government's Home Affordable Foreclosure Alternatives Program (HAFA). HAFA offers additional options - a Short Sale and Deed-in-Lieu of Foreclosure (DIL) - to help homeowners avoid foreclosure.

HAFA is designed to help homeowners, who can no longer afford their home, avoid foreclosure and resolve their mortgage debt. HAFA may be an option if: You were not eligible for a permanent modification under the Making Home Affordable Program - HAMP - (e.g., you didn't qualify for a trial mortgage modification, didn't successfully complete the trial period, or missed at least two consecutive payments during their modification period), and, Your loan is owned by Fannie Mae or Freddie Mac - or is serviced by a participating mortgage company - if you're not sure, click the links to check.

What Are The Benefits?

Eliminate your mortgage debt, Assistance for relocation is available (up to $3,000), Avoid foreclosure, May be able to get another Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years).

How Does It Work?

If you qualify for HAFA, you'll go through a process similar to that of a traditional short sale. With HAFA, the sales price is established upfront helping to streamline the process and approvals. If your home does not sell or the short sale is not approved, you may eligible for a Deed-in-Lieu. A HAFA short sale must be an "Arm-Length" transaction meaning a transaction in which the buyers and sellers of the property act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party. Other guidelines of a HAFA short sale include a maximum loan balance of $729,750 on loans originated before 2009, allowed on 1st liens only, no Mortgage Insurance Company Approval, and most importantly in most situations no deficiency judgement. Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you qualify for HAFA.

Download a HAFA brochure.

Deed-in-Lieu of Foreclosure

If you can no longer afford your home and other alternatives to keep your home have not been successful, you may feel like you have reached a dead end and foreclosure is unavoidable. But you may qualify for a Deed-In-Lieu, which would help you resolve your delinquency and avoid foreclosure.

What is a Deed-in-Lieu?

A Deed-in-Lieu of Foreclosure (DIL) is where you, the homeowner, voluntarily transfer the ownership of your property (the title and all property associated with it) to the owner of your mortgage in exchange for a release from your mortgage loan and payments. A DIL is an alternative to foreclosure and should be considered if: (1) You are ineligible to refinance or modify your mortgage, (2) You are facing a long-term hardship, (3) You are behind on your mortgage payments, (4) You owe more on your home than it's worth, (5) You don't want to sell your home or haven't been able to sell your home, (6) You can no longer afford your home and you are ready to leave

What Are The Benefits?

Eliminate or reduce your remaining mortgage debt, Avoid the negative impact of a foreclosure, May be eligible for relocation assistance in some cases, Start repairing your credit sooner than if you went through a foreclosure, May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (at least 7 years), If your loan is owned by Fannie Mae, you may qualify to lease your home through the Deed-for-Lease Option

What To Do Next?

Call your Mortgage company to see if you qualify for a loan modification. Gather your financial information - Make sure you have your basic financial and loan information on hand when you call your mortgage company. You'll need:, your mortgage statements, including information on a second mortgage (if applicable), your other monthly debt payments (e.g., car or student loans, credit card payments), and, your income details (paystubs and income tax returns). Explain your current situation - Be ready to outline your current hardship and explain why you are having trouble making your mortgage payment, the reasons why this is a long-term problem and inform your mortgage company that you want to sell your home to avoid foreclosure. Your mortgage company will need to understand the reasons why you are having difficulty in order to find the right solution for you

Your mortgage company wants to help you avoid foreclosure and, in most cases, will be willing to work with you. The biggest mistake you can make is to wait any longer to take action.

Once you are approved for a short sale, call us at 707-297-6580 so we can assist you with the financial package (noted above) and outline a detailed plan for marketing your home for sale.

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Buying a Short Sale?

If you're interested in buying a property that's listed as a short sale, here's how It Works.. Unlike in a foreclosure, the bank does not own the property in a short sale. However, because the bank must approve the sale (because it is the lender, not the seller, who will be taking a loss on the property) it will seem like the buyer is purchasing the property from the bank. Short sale transactions, however, can be much more time-consuming and patience-testing than foreclosure transactions.

In many ways, buying a short sale is like buying a property from a regular homeowner. You will do do your homework (and have us help you) zero in on comps that support a fair market value for the short sale you want to puchase. Just because the home is upside-down the bank is not interested in giving the property away, so your offer should be reasonable. Sometimes the short sale price may have little bearing on market value and may, in fact, be priced below the comparable sales to encourage multiple offers. This is true with HAFA short sales were the price is approved before the property is put on the market.

Once we write up the offer, and the seller accepts it (the homeowner not the bank), the listing agent (the agent representing the homowner) will send the following items to the bank:, Your listing agreement, your executed (signed) purchase offer, your lender's preapproval letter and copy of your earnest money check, and the seller's short sale package (see list of items in the short sale tab above). If the package is incomplete, the short sale process will be delayed. It is very important that a COMPLETE package is sent to the bank. Although as a buyer or buyer's agent we do not have access to the information submitted in the "Sellers Package", ie., Hardship Letter, copies of tax returns, etc., we make sure the listing agent confirms that each item required by the bank has been included. Again, if the package is incomplete this will only slow down the process and we might advise you to move on.

When writing up a short sale contract,