In the past it was rare that a lender would accept a short sale. Due to overwhelming market changes lenders have become much more negotiable when it comes to these transactions. Recent changes in policy and the Obama administration have also improved the chances of getting a short sale approved.
A homeowner is ‘short’ when he owes an amount on his property that is higher than the current market value.
A short sale occurs when the lender or lenders agree to accept less then the full balance of the loan at closing. A buyer closes on the property and the property is ‘sold short.’
A Short Sale Is Not…
It is not a ‘get out of jail free card.’ The homeowner must be in or headed for foreclosure.
Qualifying For A Short Sale…
The homeowner must show meet the following qualifications for the lender to consider a ‘short sale.’
1. Acceptable Hardship - This is a material change in the homeowner’s financial situation that is or will affect his ability to pay the mortgage.
2. Insolvency - The homeowners must show he does not have liquid cash or assets that could be used to pay down the mortgage.
3. Monthly Income Shortfall - The lender will want to see that the homeowners monthly expenses are greater than his monthly income, making it impossible to keep up with the mortgage payments.
A ‘short sale’ is a complicated process that takes the expertise of experienced professionals. As a Certified Distressed Property Expert (CDPE), I have been trained in providing counseling to homeowners in distress, helping to identify their options and successfully close a short sale.
If you have questions or feel you may qualify for a short sale, please contact me for a free consultation.
Understanding your options help save you and your family from financial ruin.