Common Short Sale Questions & Answers
Question # 1 - What is a Short Sale?
Answer: A short sale is when the lender agrees to allow the owner to sell the home for less than the current mortgage amount. In cases where a second mortage holder is involved both lenders must agree to the short sale.
Question #2 - How Do I Qualify?
Answer: The short answer is that in the majority of cases you must first have been declined for a loan modification program from your bank. At this point, under the
Foreclosure Alternative Program, FAP, the bank will provide you with an authorization letter to conduct a short sale. If a homeowner follows these steps, then at the end of the process they will be free of all obligations from their lenders and in the majority of cases not be subject to any tax liabilities as a direct result of this transaction. If you would like more details about the
government programs click here.
Question #3 - Do I have any other options?
Answer: Yes, you basically have four options
- The first is a loan modification, under the Making Home Affordable Loan Modification Program. A loan modification basically allows changes the terms of your loan by reducing the interest rate, extending the length of the loan, and/or forgiving portion of the loan amount to reduce your payments to approximately 31% of your gross income.
- The second is a traditional short sale. This involves selling your home for less than what is currently owed on your mortgage.
- The third option is a died-in-lieu of foreclosure. This typically occurs in the event of an unsuccessful short sale and the owner deeds the property back to the bank, avoiding a foreclosure. Under the FAP program, homeowners who elect this option after they have tried unsuccessfully to sell their home as a short sale are given up to $1,500 to assist them in moving.
- The fourth is foreclosure. This is a process by which the bank takes ownership of your home for lack of payment and the local laws pertaining to eviction are followed.
Question #4: How long does it take?
There are several steps to a short sale process, from start to finish you can expect a time range of 90-120 days. The first step is obtaining a short sale authorization. This varies greatly by bank however the large lenders including Bank of America and Citi Mortgage have signed on to a standard process to reduce this timeline. However this step alone can take anywhere from 30 – 90 days. The second step is to obtain a buyer for your home, and given the current slowing of new bank owned properties on the market which has greatly accelerated housing demand, this can take from 1 to 30 days. The final step is closing the transaction which requires the bank accepting an offer and the buyers closing on time. This process can take anywhere from 30 to 90 Days.
Question #5 - How is Family Realty Group able to help me with my Short Sale for free?
Answer: Our services are free to you as the homeowner because under the new Foreclosure Alternative Program our fees are paid for by your lending institution, or bank.