Sunday, January 24, 2010

The Short Sale Process

 What is a Short Sale?

A short sale is an arrangement between the current owner of a home and the bank to accept an offer for less than the total amount owed to pay off the home. The "deficiency" is the difference between the amount owed and what the bank collects at the short sale.

Different banks have different policies. The best case scenario is to get a bank that actually writes off the deficiency. All that happens here is that the seller has some minor derogatory credit reporting, but doesn't actually owe the bank any more money.

Some banks will do a promissory note for the deficiency. The owner will still owe this after the home is sold. NEVER EVER ASSUME THAT A DEBT THAT YOU OWE A LENDER IS GONE UNLESS YOU HAVE THE DETAILS OF THE RELEASE OF THAT DEBT IN WRITING

 Most banks will not agree to a short sale in writing until you have a formal offer - you will have to submit an application, hardship letter, financial statements, tax returns, pay stubs, the purchase agreement from the buyer, a HUD statement from the pending transaction, payoff letters from all lenders involved, and several other things depending on the lender.  Each bank is different in what they require.

A short sale is not a quick fix - it is a long drawn out process.

Always check with someone who has a lot of experience with short sales if you are selling your buying a home involved in a short sale
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