By Simon Volkov

Short sale real estate is a hot topic of conversation. This option is sometimes offered to borrowers who can no longer afford to stay in their home. Instead of foreclosing on the home, banks allow the property sold ‘short’ of what is owed on the loan.

Entering into a short sale real estate agreement can be a complicated process that is time-consuming and frustrating. However, those with patience to work through can be released from the financial obligation of their mortgage and avoid severe financial damage.

The only way to know if property qualifies for short selling is to communicate with your lender. You will have to undergo a financial audit to determine if your loan and property qualify.

Normally, borrowers are assigned to work with a bank loss mitigator throughout the process. While this person is supposed to be helpful, that is not always the case. If you find you aren’t able to achieve desired results you may want to obtain housing counseling through HUD.

HUD offers no-cost counseling services to those facing foreclosure and can help with short sale transactions. Some people prefer to hire independent loss mitigators or real estate attorneys, but this is generally cost-prohibitive for those in the midst foreclosure.

The protocol varies by lender, but most require qualified borrowers to present financial records and a letter of hardship. It’s smart to take time crafting the hardship letter because it can have a large impact on lenders’ decision to grant short sale approval.

Banks tend to prefer working with borrowers who have been proactive in resolving financial problems. It can be helpful to include any action taken to reduce expenses within the hardship letter. Strive to keep information succinct while providing sufficient details to help lenders understand your current situation.

Take time to review everything twice before submitting required short sale information to the lender. Just one wrong form or missed deadline can ruin chances for walking away from your home without owing an extra dime. It can be beneficial to have a mortgage specialist or attorney review documents.

Never, ever lie on financial documents submitted for short sale approval. Doing so is a federal offense that carries a sentence of jail time and monetary fines. Banks compare income to filed tax returns. If it is discovered that income was misreported when obtaining the mortgage loan, borrowers could be charged with mortgage fraud.

Subprime lending is a primary cause of mortgage foreclosure. Banks are scrutinized more than ever. Lawsuits have been filed against banks for pushing through foreclosure notices without reviewing loan contracts. Law firms are putting together class action lawsuits against mortgage lenders. Everyone is under the microscope, especially those who want out of their loan.

It is best to be prepared for financial scrutiny and organize all financial records pertaining to the purchase of your home. Gather wage statements, loan documents, bank statements, insurance policies, home improvement receipts, and current and previous year tax returns.

Borrowers have a specified amount of time to sell their property once banks grant short sale approval. Many lenders require a qualified buyer be in place before they will authorize the sale. Others let borrowers list their home through a realtor. It’s crucial to understand your lender’s policies and procedures before signing on the dotted line.

One important element is to inquire as to the type of short sale offered. Many banks require borrowers to pay the difference between the sale price and loan balance. If the amount cannot be paid in full banks will obtain a judgment and can collect balances via wage garnishment. Judgments are reported to the credit bureaus and stay on reports until paid in full.

Always attempt to negotiate with lenders for a payment in full agreement. This means banks agree to accept the purchase price as payment in full against the loan. Obviously, this is the preferred short sale real estate option, but may require services of an attorney to achieve.

About the Author: Author of “Short Sale Hardship Letter eBook Course,” real estate investor Simon Volkov shares tips for improving chances of obtaining short sale real estate approval. Discover insider-secrets and techniques at ShortSaleHardshipLetter.com.

Source: isnare.com

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