If you are a homeowner in distress or if you have defaulted on your mortgage or simply cannot afford your payments, a short sale may be your best option.  Once you are 90 days delinquent on your mortgage, a Lis Pendens is filed by the lender.  The sooner you address the delinquency the greater the likelihood the lender will want to work with you to sell the property.

 In a short sale, you list your property for sale at fair market value, even if that value is lower than what you owe on your mortgage. If a buyer is identified and the property is sold, the proceeds from the sale are used to pay off your mortgage debt, even if the proceeds are less than the amount owed on the mortgage.

By working with your local real estate agent to successfully complete a short sale, you can help resolve your mortgage situation with less negative consequences than might result from a foreclosure. If you meet all the requirements of the HAFA  (Home Affordable Foreclosure Alternative) program, the lender will accept less than the amount due on your current mortgage and release you from any further responsibility for your outstanding mortgage balance. In addition, you may be eligible for relocation assistance of up to $3,000 to help cover your moving, rental or relocation expenses.

 How does a short sale work?

Step 1 Qualification:

1.      There must be a realistic hardship for the lender to approve your sale.  A hardship can be described as job loss, income loss, divorce, relocation, and many other factors.

2.      Your lender will require some documents to begin the process:

Hardship Letter - This will outline your current hardships justifying the need for a short sale.

Financial Worksheet - This outlines your assets, liabilities, and expenses.

TWO most recent income tax returns

TWO most recent bank statements.  All pages must be included.

TWO most recent pay stubs from work

Third Party Authorization – This will allow your realtor to discuss terms of your mortgage with your lender on your behalf.

Step 2 Pre-Sale:

After your eligibility for the program is determined, you will receive the Short Sale Agreement to sign and return. The Agreement will outline the minimum sale price that will be accepted for the sale of your property and will also identify the sales costs that may be deducted from the final sale price. Sales costs include broker commissions and closing costs. There are no upfront fees paid by you.  These fees are paid by your mortgager upon successful closing of the short sale. If you agree to the terms of the program, you will be asked to actively market your home with your real estate agent for a period of no less than 120 days.

If you have any questions on how a short sale works or whether it is the right choice for you, you can call me directly at 718-775-5344 and I will be happy to assist.