Short Sales Explained

Perhaps you have fallen behind on monthly mortgage payments and feel you are running out of options. Maybe you have experienced a significant change in income, or are concerned about your family’s ability to remain financially solvent in these tough economic times. A short sale may be an alternative to foreclosure or bankruptcy for your family.

A short sale may be something for you to consider if the amount you owe on your home far exceeds the current market value. Some of the benefits of a short sale include a decreased negative impact on your credit score, as well as allowing the possibility of you to purchase a new home in less time than if you experienced a foreclosure. Some lenders may postpone foreclosure proceedings if presented with a current, legal contract for current, fair market value of your home.

In the short sale setting, the lender/lien holder agrees to accept less than what is owed on the loan, in exchange for releasing the lien associated with the mortgage. Because there may still be a deficiency balance (the difference between what you owe and the short contract), it is important to negotiate with the bank on the release of that deficiency balance as well. Many banks also require loan holders to prove they are currently experiencing a financial hardship. Financial institutions may additionally require an independent assessment of your home’s current value. Each lien holder has specific requirements, paperwork, and criteria to determine if they will accept a short sale.

If you are considering a short sale for your current home, or are currently behind on mortgage payments, you should strongly consider contacting an experienced attorney to see if a short sale may be a good option for your family. You can contact me directly here.