What Is A Short Sale
A "Short Sale" is the sale of a private property by the owner for less than the total amount of debt that secures the property. The short sale involves the complete or partial waiver, release or cancellation of the debt in the note and the prior approval of all the creditors is necessary. The list of creditors or holders of the debt , can include a senior mortgage lender which is usually considered the 1st mortgage and one or more junior lenders or private investors which is sometimes considered the 2nd or an equity line of credit.
The term "short sale" refers to the difference between the total debt balance owed by the mortgagor to the lender and the net proceeds from the sale. For a homeowner to qualify they first must have experienced some type of financial hardship such as job loss, lost income or divorce, that results in the inability to make the monthly mortgage payments and forces them to find a less expensive place to live. Second, the house loses value from the date of mortgage origination to the present. Third, the hardship results in an inabiliy to pay between what is owed and present market value.
To lessen the economic loss some lenders may agree to only a partial waiver of the debt and ask the borrower to pay a portion of the deficiency at closing. That is referred to as a cash contribution.
There are a couple of key factors for a lender to agree to a short sale. One is whether the sale price is equal to fair market value and the other is the nature and legitimacy of the borrower's hardship.
For more information or to see if a short sale would be right for you, Contact me and I will be happy to meet with you and discuss your options in detail..
