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What Is A Short Sale?

If you have tried refinancing or a mortgage loan modification with your lender and both the mortgage modification and refinance have been declined, we may be able to help negotiate a short sale to avoid foreclosure.  Selling your home in a short sale may allow you to walk away without owing additional money to the lender.

 

In real estate, a short sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the homeowner. The homeowner sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove a proposed sale.

 

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.

 

A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the homeowner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure.

 

In summary, a short sale is nothing more than negotiating with lien holders to accept a payoff for less than what they are owed.  Lenders have a department (typically called a loss mitigation department) which process potential short sale transactions. Typically, lenders do not accept short sale offers or requests for short sales until a Notice of Default has been issued or recorded with the locality where the property is located.

 

Lenders have a varying tolerance for short sales and mitigated losses. The majority of lenders have pre-determined criteria for such transactions. Other distressed lenders may allow any reasonable offer subject to a loss mitigation’s approval.  

 

We have experience with most lenders and can help you negotiate a short sale on your behalf. 

 

Get help now.  Speak with a Mortgage Loan Modification Specialist at 1-800-276-2965 and select option 1 or click here for your free no obligation consultation.