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Short Sales Help,
Frequently Asked Questions Part I

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When Should I Investigate a Short Sale Option?

As soon as you know that you will have a problem paying your mortgage. The most important decision you need to make is to "make a decision."

Typically, when homeowners avoid confronting the serious lifestyle and financial consequences of defaulting on their mortgage, they end up with a significantly worse outcome than they would have, had they taken charge of their own destiny while they could.

Image thanks to trulia.com

The Most Important Thing Is To
Realize That You Have Options
And Not Give Up Hope!

If you take action so the lender does not have to foreclose, the lender will be more inclined to legally forgive the amount they are shorted. That's why it is important to begin the process as soon as you know you are challenged.

The more documentation you can provide the lender, the faster the decision will be. However, currently lenders are swamped with these requests, since you are not the only one facing a possible foreclosure. Thus, the earlier you can start the process, the better chance you have of getting it approved.

How Do I Initiate The Short Sale Process?

To initiate the short sale process, contact your lender(s). Typically, the department to contact is your lender's Loss Mitigation Department. Either you or your authorized representative needs to ask the lender for a short sale package or kit. Most lenders will make their particular processing forms and procedures pertaining to their required short sale documentation available to homeowners.

Unlike what many people believe, some lenders will also allow you to apply and get approval for a short sale even when you have never been late or missed a mortgage payment. Please note that lenders will typically only consider a short sale after you, the borrower, have done the following:

Missed Two Mortgage Payments;

Have No Means To Continue Paying The Mortgage;

Provide All The Necessary Financial And Hardship Documentation To The Lender;

Agree That You Will Not Derive Any Proceeds From The Sale.

How Do I Proceed with a Proposal for a Short Sale to My Lender?

Verify The Value Of Your Property. If you are selling the property through a real estate broker, your broker will provide you with an estimate of market value.

Conduct a Market Analysis of Similar Home Sales And Those Currently For Sale. Add up all the costs of selling the property. If you are using the services of a real estate broker or attorney, they will provide an estimate of closing costs. If you are selling the property on your own (for sale by owner), call a local title company and ask, as a seller, what the closing costs will be.

Determine the Amount Owed Against the Property. This will be the total of all loans against the property. Do the calculations. Subtract the total amount owing against the property from the estimated proceeds of the sale. On a short sale, this will be a negative number.

Contact Your Mortgage Lender or Lenders. Don't just leave a voice message or email customer service. Talk to someone in the customer service department or better yet the Loan Mitigation (or Problem Loan) Department. Talk to a supervisor or manager who has the authority to approve a short sale request. Tell them your situation. While mortgage lenders can be sympathetic to these problems, they are never anxious to allow a short sale. If you're uncomfortable in this role, let your lawyer, real estate broker or adviser negotiate with your lender.

Ask the Lender What Its Procedures Are For A Short Sale. Some lenders are willing to work with you by reducing the amount owed or making other arrangements. Others will look to the agents involved (if any) or anyone else who's making money off the transaction to see if they are willing to make concessions to make the transaction happen. Still other lenders will tell you that your debt is your responsibility, one way or the other.

Write A Letter "Authorizing" Your Mortgage Lender To Disclose Your Loan Information to Interested Parties such as real estate agents, lawyers, or title companies. Your loan information is subject to privacy laws, so your lender needs your written authorization to release this data to anyone. At a minimum, this letter should include the property address, your name, your loan number (or other identifying data) and, if appropriate, a list of the parties to whom you wish this information to be given.

What Makes A Homeowner A Short Sale Candidate?

You are a short sale candidate if you owe more on your home than what it is currently worth and you can no longer make the payments. There needs to be a hardship involved like a lost job, medical, death, divorce or many other reasons.

Should I Continue To Make Mortgage Payments If I Plan To Apply For A Short Sale On My Property?

Unless you have received information to the contrary from the lender in writing, you are responsible to continue to make mortgage payments.

For the rest of this article please go to

Short Sales Help FAQ, Part II

Short Sales Help FAQ, Part III