A short sale occurs when a home seller owes more on their mortgage than the home is worth in the current market. The sale needs to be approved by the seller's lender as they will be accepting an amount that is "short" of the total loan balance.
More lenders are getting on board with the HAFA program as it continues and even Bank of America is finally promising a more stream lined process. Due to economic conditions, the number of short sales across the country has risen dramatically. Since a short sale generally costs the lender less than a foreclosure, it can be a way for the lender to reduce it's losses.
First - DO NOT move out of your home! With VERY few exceptions, you must be living in your home to qualify under the HAFA program.
Second - DO NOT pay money to a business up front to "help" you with a short sale or to avoid foreclosure. Due to cases of fraud and abuse, the state of Maine has stepped in and now requires Loss Mitigation companies to be licensed by the state. There should not be up front fees involved for the seller of a property. Most loss mitigation fees are actually paid at closing table by the buyer of the property and are negotiated in to the contract at the time a purchase and sale agreement is negotiated.
To qualify for a short sale, a seller must show some sort of "hardship" indicating why they are unable to pay the balance. This can include job loss, increased expenses due to an illness or death, increased expenses due to an adjustable rate mortgage, or an unforeseen loss of equity due to economic conditions. Short sales are not easy, but an experienced and competent realtor should be familiar with the process, have the necessary forms, and have the tenacity to consistently follow up with the lender to facilitate the process.
Sellers facing a short sale need to be committed to completing the process and willing to provide the paperwork and documents that will invariably be requested by their lender. While sometimes frustrating, a short sale is one tool available to sellers that can be used successfully to get out of a sticky situation and move on with their own economic recovery. Below is a checklist of items the lender will require. Each lender also may have its own forms that may need to be completed.
For Even More Info, visit www.MaineShortSales.info
Many lenders have improved their short sale process in light of the sheer volume they are handling and the new guidelines. If you are considering selling your home only because you can no longer afford the payments, but you would prefer to stay in your home, you should first contact your lender. Some lenders have a "work out" department in addition to their loss mitigation department that may be able to structure a work out plan to enable you to stay in your home.