Short Sale FAQs

Short Sale Frequently Asked Questions (FAQs)

- What is a Short Sale?
- Is a Short Sale Right of Me?
- If I do a Short Sale, how much will I have to pay to sell my home?
- How do I get Started on a Short Sale?
- Can I simply deed my property to someone else and avoid the hassle?
- What sort of hardship would my lender consider legitimate?
- I am current on my loan payments, will my lender consider a short Sale?
- Why would a lender agree to accept a Short Sale?
- Do lenders approve all Short Sales?
- I have two loans on my home, can I still do a Short Sale?
- My property is in rough shape and needs work, can I still do a Short Sale?
- I am concerned about my credit.  How will a Short Sale affect my credit?
- My income problem was temporary. Do I need to sell my home?

What is a Short Sale?
A short sale is the lender approved sale of a home for less than what is currently owed to a lender(s) - the final payoff will be "Short" of what was actually owed.  The lender(s) accepts a discounted payoff to fully satisfy the loan.

The best part, the existing lender pays virtually all sales costs - including commissions, escrow and title fees and repair costs.  You get your home sold, the loan is paid off and you avoid foreclosure. Back to Top

Is a Short Sale Right of Me?
Lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage.  If you are faced with a hardship that makes it likely you will be unable to meet your loan obligation, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan.  By completing a Short Sale, your lender has determined that it is better for them than foreclosure.  Bottom line, your lender wants to work with you.  Back to Top

If I do a Short Sale, how much will I have to pay to sell my home?
In most cases you'll have no out-of-pocket costs as the lender pays virtually all sales costs including commission, escrow and title fees, and approved property repairs.  Back to Top

How do I get started on a Short Sale?
It's easy, if you'd like to get prequaified for a Short Sale we can start the process on-line.

If you would prefer to discuss this on the phone, or set an appointment call 602.615.6042.  There is no charge to you to get started.  It's as simple as contacting us and we'll get to work.  If you later decide you don't want to do a Short Sale, that's okay too.  Back to Top

Can I simply deed my property to someone else and avoid the hassle?
Deeding your property without paying off the loan is nearly always a bad idea.  The lender still considers you primarily responsible for payment on the loan.  If loan payments don't get paid, or if the lender ultimately forecloses, this will show on your credit report.

Secondly, when you deed your property to someone else, you give up control of the property.  Along with the deed goes the ability to control and make decisions about the property.

Don't deed your property to someone without paying off the loan unless you've consulted with an attorney.  Back to Top

What sort of hardship would my lender consider legitimate?
To some extent, that will depend on the lender considering the Short Sale request.  Generally, as long as the hardship is real and the lender believes the loan is likely to become delinquent as a result, the short Sale request will be processed by the lender's Loss Mitigation Department.  A big key to getting a loss mitigation negotiator to accept a hardship is to submit a strong hardship letter.  The hardship letter sets the tone for the entire transaction.

Here is a list of hardship reasons commonly and frequently accepted by lenders:

• Loss of Job
• Reduction of Income
• Interest Rate Increases
• Business Failure
• Severe Damage to the Property
• Death of a Spouse
• Death of a Family Member (especially if it involves relocation)
• Severe Illness
• Inheritance of a Property with a Loan Payment
• Divorce
• Separation
• Mandatory Job Relocation
• Medical Bills
• Military Service
• Payment Increase or Loan Adjustment
• Insurance or Tax Increase
• Too Much Debt
• Incarceration                                                Back to Top

I am current on my loan payments, will my lender consider a short Sale?
The answer is maybe.  Some lenders will accept a Short Sale file on loans that are not yet delinquent.  Other lenders will not accept the file until the loan is in a delinquent status.  We can put your Short Sale file together within a few days and submit it for approval - at no charge to you.  Back to Top

Why would a lender agree to accept a Short Sale?
There are several reasons why a lender would approve a Short Sale payoff.  Some of the primary reasons are:

• Legal Concerns - Lenders have come under legal pressure to work with borrower to equitably resolve situations where homeowners are unable to meet their loan obligations, particularly when the homeowner makes an effort to arrive at a compromised solution.
  
• Wall Street is Watching - lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market.  They need to sell these loans in order to put the funds back to work by reinvesting the money again - loaning the money again, and collecting loan fees and interest.  If loans perform poorly after they are sold in the secondary market it could impact that lenders ability to sell their loans in the future.  A successful Short Sale gets the loan payoff resolved quickly and gets that money working again for the lender.
  
• Foreclosure and Asset Management Expenses - In addition to the lender's legal and administrative costs of foreclosure, if a lender acquires a property through foreclosure, the property must be managed until it is repaired and resold.  It's expensive to manage real property assets.  Keeping properties maintained, keeping utilities on, making repairs, and the administrative costs associated with these activities are all costs the lender would prefer to avoid.  A successful Short Sale eliminates most of these lender costs.
  
• Reserve Requirement - Delinquent and non-performing loans place another burden on lenders.  For all delinquent and non-performing loans, lenders must set aside funds in reserve to deal with potential losses.  These funds can't be put to work generating new income for the lenders until this bad debt is resolved.  A successful Short Sale lets the lender put more money to work.
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Do lenders approve all Short Sales?
In a word, no.  That's why is critical to work with a real estate professional that has extensive experience at getting Short Sales approved.

From the presentation of the Short Sale package to the lender, to working with the lender's loss mitigation department, we know how to keep the file moving toward approval.

The first step is to get prequalified for a Short Sale.  There is no charge for this and it's easy.

                                   Just Click or Call 602.615.6042             Back to Top

I have two loans on my home, can I still do a Short Sale?
Yes.  We will work with both lenders to approve a Short Sale transaction.  Even if the current market value of your home is below what you owe on just the first loan, we can normally get the two lenders to cooperate.

In the end, neither lender wants to own another home through foreclosure.  Back to Top

My property is in rough shape and needs work, can I still do a Short Sale?
Absolutely.  In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn't.  The lender knows the risk of loss increases when they foreclose on a property that needs lots of work.

Aside from the expenses of completing the work, lenders are simply not set up to get the work done.  They are in the loan business, not the fix-it business.  Back to Top

I am concerned about my credit. How will a Short Sale affect my credit?
The big key here is to avoid foreclosure.  By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy.  In the course of getting your Short Sale approved you may miss a number of payments.  These missed payments will show on your credit report and will negatively affect your score.

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and services) relatively quickly.  Back to Top

My income problem was temporary. Do I need to sell my home?
You may be able to keep your home by getting the lender to approve a forbearance or loan modification.  You need to convince your lender of two things:

• The problem that caused the loan payment disruption was beyond your control - illness, injury, temporary disability, forced job change, etc..
• You are now solidly in a position to stay current on your loan payments AND make steady progress in repaying the delinquent amount.   Back to Top