In this page you will find information about the short sale process. I hope these questions and answers will make you decide if a short-sale is your best option. Most homeowners choose a short-sale instead of a foreclosure and you will see why when we do the comparison between the two. Also if you have any questions send me an email and I will be happy assist you.

What Is A Short Sale?

A short sale is a work out program that allows the homeowner to sell the property for less than total amount owed. Upon final approval, a short sale can help homeowners avoid further collection activity or foreclosure action. For example let’s say that you have a mortgage of $200,000 but your house is only worth $100,000 the bank will approve you for a short-sale so you can sell your property for less in this case $100,000 less.

It’s a Short-Sale a good option?

A short sale can be the best option for homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially. Short sales appear on your credit report as "pre-foreclosure in redemption", not as "debt discharged due to foreclosure" Less impact on your credit score. All mortgage debt is fully discharged.

Why is the number of short sales rising?

Due to the recent economic crisis, including rising unemployment, and drops in home prices in communities across the nation, the number of short sales is increasing. Since a short sale generally costs the lender less than a foreclosure, it can be a viable way for a lender to minimize its losses. (source-Realtor.org)

Foreclosure VS. Short-Sale

Foreclosure:

1. 1.Credit Consequences:
   

Score will be lowered by more than 300 points and typically will affect credit score for over 3 years. Will remain as a public record permanently and on a person’s credit history for 10 years or more. It is the one credit item that is almost impossible to be repaired. It is the most devastating issue for future credit availability.

2. 2.Deficiency Judgment:
   

The lender will seek a deficiency judgment to collect the difference for an indeterminate period of time. The home will have to go through an REO process if it doesn’t sell at auction and this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment.

3. 3.Employment:
   

May put a potential new hire in jeopardy when seeking employment from certain companies, a foreclosure is one of the most detrimental credit items an applicant can have.

Security clearances in government positions such as de military and law enforcement can be jeopardized by a foreclosure.

Also some employers have the right and are actively checking the credit of employees who are in sensitive positions and in many cases a foreclosure is the reason for reassignment or termination.

4. 4.Future Loans:
   

When applying for a new mortgage loan a foreclosure will have a tremendous impact on your interest rate. If you are an investor you will be ineligible for a Fannie Mae-backed investment mortgage for a period of 7 years and if you are homeowner for a period of 5 years.

Short-Sale:

1. 1.Credit Consequences:
   

Score will be lowered by 50 points if all other payments are being made and typically will affect credit score for only 18 months. Only late payments on mortgage will show and after sale, mortgage is normally reported as: “paid as agreed”, “paid as negotiated”, or “settled”. A short sale is not reported on a credit history, there is no specific reporting item for “short sale”.

2. 2.Deficiency Judgment:
   

In some cases it is possible to convince the lender to give up the right to pursue a deficiency judgment against the homeowner. The home won’t have to go through an REO process and won’t sell at auction. The home will be sold close to market value and will result in a lower deficiency and lower costs for the lender.

3. 3.Employment:
   

A short sale is not reported on a credit history therefore not a problem for future or current employment. Also it does not challenge most security clearances.

4. 4.Future Loans:
   

When applying for a new mortgage loan there is no similar declaration or question on the mortgage application for short sales. If you are an investor or homeowner you will be eligible for a Fannie Mae-backed investment mortgage after only 2 years

-As a CDPE agent I will explore every option and work towards a solution.

-While it may not seem like it now there will come a time where your current financial troubles will pass and you will feel much better knowing that you did everything possible to avoid this devastating financial consequence so many people face today.

Are you familiar with the process and want to start?

If you are already knowledgeable in this subject and decided to do a short sale then call me or Email Me and have ready at the time of my visit the following:

1. ➡Supporting Hardship Documentation (medical bills, etc.) (if applicable)
   

2. ➡2 years Tax Returns.
   

3. ➡Last 2 months bank statements.
   

4. ➡Last 2-3 months pay stubs.
   

5. ➡Other sources of income (retirement, disability, social security, etc.) (if applicable)
   

6. ➡Latest mortgage statements and HOA Coupon
   

7. ➡Repair Estimates for Property (if applicable)
   

8. ➡Any letters from Attorney(s), Court Documents, etc. (if applicable)