Frequently Asked Questions

Why will my mortgage lender allow a “short sale”?

It is not guaranteed that your lender will allow a short sale. However, your mortgage lender stands a much better chance of minimizing the loss on your property if they accept your cooperation and allow a short sale. This allows them to sell the property much sooner than a foreclosure. It is a known fact that it is also easier to sell a property that is occupied than one that is vacant. A vacant foreclosure will burden the lender with carrying costs for the property such as insurance, taxes, repairs, and general upkeep. Your lender has various compliance items and associated costs with delinquent loans. Finally, a popular general strategy for dealing with foreclosure is to claim bankruptcy. This is not the best idea for you or the lender. Your credit will be impaired and the lender will incur additional costs. A successful short sale negotiation benefits you as the distressed homeowner and the lender.

How do I determine if I am a good candidate for proposing a short sale with my lender(s)?

In today’s market if you are underwater relative to your home equity vs. what you owe your mortgage lender(s) and it’s costing you your sleep, then you are generally a good candidate for a short sale. In conjunction with this many people may have a family or financial hardship or upcoming loan payment adjustments that will cause major affordability issues. All of these issues and many more, either separately or combined, make you a good candidate.

How long is the process to complete a short sale?

Typically it takes between one and three months to complete the process of successfully negotiating and finalizing a short sale with your lender(s). The comprehensive solution and overall strategy provided by the course requires the sale of your home. Real estate markets are localized and the time required to sell your property depends upon the marketability of your home. You lender’s current staffing level and willingness to cooperate will also affect the expected time frame to completion of a successful negotiation.

Why shouldn’t I just let my home go to foreclosure?

This is a personal choice, however, the consequence of a foreclosure will adversely affect your credit for years. A mortgage is the most important form of debt, and it gauges very high on the credit scoring scale. It is going to cost you a lot of time, money, and aggravation. On the other hand, a short sale is listed on your credit report as "settled debt". You are taking responsibility for your debt regardless of the circumstance. Your credit will be less damaged with a short sale versus a foreclosure. It is always better to take the positive, proactive path and attempt to maximize your options with a Short Sale.

Does the homeowner have any liability with a short sale?

Yes.   You are always subject to a lender that seeks to obtain a deficiency judgment against you for any unpaid or forgiven debt. Anyone who has signed the mortgage note has assumed a level of personal liability that provides the lender recourse to collect on this debt. Any debt that is forgiven, dependent upon the circumstances, may be viewed by the IRS as income. Recent legislation has been passed by Congress that will relax this tax burden for the majority of circumstances. However, the course material will provide you with the strategy to mitigate the deficiency judgment directly with your lender(s) and the guidance to address the IRS 1099C requirement so you do not encounter and unnecessary financial burden after you have successfully completed your short sale.