All About Short Sales:
What is a short sale?
A short sale is a sales transaction in which the Homeowner's mortgage lender(s) agrees to accept a payoff of less than the balance due on the loan(s). This can include a Second Mortgage or Home Equity Loan
The Basics of a Short Sale
Your Mortgage Lender may grant a short sale if you are experiencing a financial hardship, and you owe more on the mortgage than the home is worth.
A few examples of a hardship are:
- Unemployment / reduced income
- Medical emergency
- Job transfer out of town
As the seller, you will need to prepare a financial package for submission to your mortgage lender(s). Each Mortgage bank has its own guidelines but the basic procedure is similar from bank to bank.
The Short Sale Process at the Bank
Buyers and Sellers may wait a long time to get a response from the bank. I as your listing agent will contact the bank(s) regularly and keep careful notes of the short sale process as we move forward.
Following is a typical short sale process at the bank:
- Bank acknowledges receipt of the file. This can take 10 days to a month.
- A negotiator is assigned. This can take 30 to 60 days.
- A BPO (Broker's Price Opinion) is ordered. The bank probably will refuse to share the results of the BPO as it is for internal purposes.
- A second negotiator may be assigned. This can take another 30 days.
- The file is sent for review. This can take 2 weeks to 30 days.
- The bank may then request that all parties sign an Arm's Length Affidavit.
- The bank issues a short sale approval letter.
How Long does the Short Sale Process take?
After your home is placed on the market for sale, an offer is received, negotiated, and accepted. Then, the sales contracts are signed by both buyer and seller, some short sales get approval in 6 to 8 weeks after submitting the complete short sale package. Others take 90 to 120 days, on average.
If your mortgage payment is unaffordable and you are interested in moving to more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through the government's HAFA program. The benefit of a HAFA short sale is that you are no longer responsible for the difference between what you owe on your mortgage and the amount that your home sells for. You will also receive $3,000 in relocation assistance upon successful closing of your Short Sale or Deed-in Lieu
You may be eligible to apply if you meet all of the following:
- You live in the home or have lived there in the last 12 months.
- You have a documented financial hardship.
- You have not purchased a new house within the last 12 months.
- Your first mortgage is less than $729,750.
- You obtained your mortgage on or before January 1, 2009.
- You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
*Eligibility criteria are for guidance only.
HAFA is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac or serviced by over 100 HAMP participating servicers
For More Information:
I hope you found this information I provided to helpful. To schedule a Short Sale Consultation, please contact me today.
Home Affordable Foreclosure Alternatives (HAFA) Program
The short sale process is still a mystery to many people, even after all these years. That is why hiring a Real Estate Agent who is experienced and knowledgable in Short Sale Transactions is critcal during your time of personal and financial hardship. I am here to walk you through this process all the way to the closing table.
Below is some information to give you an idea about what a short sale is and how the process works. To schedule a Short Sale Consultation, please contact me today.