A Short Sale is where your mortgage company takes less then they are owed on your loan and either forgives the rest or works out a payment plan after the sale for the balance. Not all mortgage companies will do this. However if you are behind in your mortgage and owe more than you property is worth it might be an alternative to a foreclosure or bankruptcy. Bankruptcy or a foreclosure can impair your ability to purchase another home or obtain credit for up to 20 years.  Although all lenders have their unique requirements the following will give you a pretty good idea of what to expect. Remember to short sale your property you will need your mortgage company’s approval. 

·         CMA: First of all you need an idea of what your property will sell for quickly, usually in 90 days. This can be done by getting a CMA or a Comparative Market Analysis. Any real estate broker can do one but this is where experience matters. You have to remember a mortgage company will only consider taking less is if you have a bonafide offer. The best way to do that is to price your home where the market is and not over price it. (Picking the Right Agent).

             ·             Letter of Authorization: A mortgage company typically does not want to and are prohibited from discussing 
                       any of  your  personal information without written authorization to do so. If your real estate broker is attempting to 
                       negotiate an offer where they need the banks “approval” it is imperative that you get them a letter. (Sometimes it 
                       takes 7 to 10 days for the letter to “get into the file”). Without it, your offer and the buyers may go away before 
                       you have time to get the bank to agree. You Authorization Letter should include the following although we have a 
                       form letter that we use.

                                                                ° Property Address
                                                                ° Loan Reference Number
                                                                ° All the Borrows Names
                                                                ° The Date
                                                                ° Your Real Estate Agent Name 
                                                                   & Contact Information

                ·       Preliminary Net Sheet: This is an estimated closing statement that shows the sales price you expect to receive 
                      and all the cost of the sale, unpaid loan balances, back taxes, real estate commission and anything that is a lien on 
                      the property.

                ·         Proof of Income & Assets: Its better to be truthful and honest about your finances. Mortgage companies want to 
                        know if you have savings accounts, money market funds, stock or bonds or anything else of tangible value. You 
                        mortgage company is not in the charity business and they wan to make sure that you can not in the foreseeable 
                        future be able to repay the debit they are forgiving.

                ·         Copies of Bank Statements: If your bank statement reflexes large cash deposits or withdrawals be prepared to 
                        offer an explanation to the mortgage company. Once again they are looking to make sure you have no asset to 
                        assist you before they agree to take less.

                ·         Hardship Letter: The sadder and more pitiful the better. The statement of facts that describes how you got into 
                      this mess and a plea for the lender to take less than full payment. Lenders understand that there are things that
                       were not under your control. Lets face it…”things happen”.  What mortgage companies are not understanding
                       about is problems that you may have caused yourself. 

·         Purchase Agreements & Listing Agreements: A copy of the fully executed purchase agreements as well as your listing agreement. Be prepared that most mortgage companies that are agreeable to take a “short sale” require your real estate agent and company to take less than they may be owed. (this is why our 3% plan is approve by most mortgage companies) Some Real Estate Companies refuse to take less than what is on the listing agreement and therefore while you have gotten the mortgage company to take less your real estate company’s refusal to do so can in effect “kill the deal”.

                        What you have to remember is the clock is ticking, that is the foreclosure clock. Other fees (legal fees, late fees, 
                        tax escrows) may push a settlement out of reach for you. If you are behind in your mortgage payment I can 
                        emphasizes enough that you have start a dialog with your mortgage company as soon as possible. If you need 
                        help or have a question please feel free to contact us.