by Anthony Y. Mauer
The short sale process is long and difficult. The homeowner is in a situation where their mortgage value is higher than that of their home – the short sale definition. Most of the time homeowners comes very close to foreclosing before admitting that the time has come to begin the short sale process.
Before initiating the short sale process, both sides must agree to it. It is a contract between two parties as to exactly how the debt will be settled – with all of the various aspects of home ownership dealt with. Avoiding foreclosure is probably the consideration with the highest priority to the homeowner.
The two parties agree to the short sale, and then to all of its minute detail. They must agree to many things such as unpaid property taxes, the selling price of the home, the purchase agreement, the payment of the various legal fees, and the amount of the debt to be forgiven. It is extremely important to have professional assistance. Do NOT attempt the short sale process with professional help.
The lender will require the homeowner to complete the “hardship letter” in order to explain how they ended up in such financial distress. The borrower will be required to document statements in the hardship letter through pay stubs, investment documents, and bank statements. This will provide a historical time line leading up to the homeowner’s inability to pay.
In the end, the short sale process is done for the bank to be able to keep its losses at a bare minimum. For this reason the lender must have the home appraised by real estate professionals in order to to assess the fair market value. It is all about the bank trying to recover as much of its money as possible.
Once the home is sold per the agreed upon terms – the proceeds will be issued to settle the debt. The bank is not required to wait for any time longer than stated in the agreement. They do not have to – nor WILL they – wait forever! If not sold as per the contract – they may proceed with the foreclosure. All of these points will be stated clearly in the contract.
If handled correctly – with professional assistance, your credit does not necessarily have to be damaged. There are many complex issues involved in the short sale process, and many people have missed deadlines dealing directly with issues relating to credit. For these reasons their credit rating was damaged. Some people have other areas of financial responsibility tangled up in their current problems and for this reason end up with damaged credit. The point is that damaged credit is not a foregone conclusion. If we follow the instruction of the experts advising us, our credit rating may well be saved..
Our goal is to pass through the short sale process and come out with the least amount of damage possible. If we do it correctly, we could come out with no property taxes, credit rating in tact, all of our fees paid, and neither bankruptcy nor foreclosure! This will be our reward – we may lose our home, but we’ll be in a great position to buy another.
About the Author:
Perry Zohanson has been helping homeowners dealing with the
short sale process for years. Be sure to check out his
bank short sale blog for excellent tips on how to make the short sale process work for you.
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