Homes in the Hagerstown, Md as well as the tri-state area! What is a Short Sale


What is a short sale in real estate? And how can it help sell my home?
A short sale takes place when a home owner cannot afford to make their mortgage payments to the bank due to unforeseen hardship or extenuating circumstances. A request from the home owner must be made to the lending bank’s “loss mitigation department” and the bank must agree to a loan payoff typically less than the amount borrowed. Short sales are a way to help distressed homeowners, but not a way to simply get rid of a home in a difficult real estate market.

Below are a few situations that could justify the bank granting a short sale. These MUST be qualified and proven in writing to the lending bank. If you are facing one of the following situations and struggling to make your payments, please talk to your lender as soon as possible:
Ø       Illness of a borrower or co-borrower and, due to that illness, cannot continue to make payments. This would have to be accompanied by a doctor’s statement of permanent or long-term disability.
Ø       Death of a co-borrower who originally qualified for the loan.
Ø       Divorce or legal separation accompanied by legal documentation and attorney’s correspondence.
Ø       Involuntary loss of job or a significant modification in pay with documentation from employer and recent and past check stubs as verification.
Ø       Illness of a family member where borrower or co-borrower is the only one that can provide care; again, a doctor’s statement would be required.
Unjustified or trivial reasons will not be supported. A few examples of these include:
Ø       You quit your job or were fired for just cause.
Ø       You refinanced or obtained a loan with accelerating payments, high interest rate, or negative amortization.
Ø       You ran your credit cards up to the max and can’t afford all your payments.
Ø       You bought a new car or other large purchase and now can’t afford all of your payments.
Ø       You decided to separate from a spouse or significant other co-borrower without a divorce or legal separation.
Ø       You decided to or need to relocate and the value of the property is less than the outstanding balance of the loan. 
The title “short sale” can be slightly deceiving since these transactions can still involve a few months of dealing with the bank, they still tend to be less costly, quicker, and less damaging than foreclosures (for both the bank and home owners). If you plan on buying a short sale home, know that you may have to wait 60-90 days for the closing.

If you have any questions about how short sales work, just give us a call and we can show you the checklist of items required by the bank, explain the process step-by-step, and go over a sample hardship letter. Or, if you feel like you might be in risk of foreclosure, please give us a call today so we can help.