Advice on Your Possible Short Sale

A short sale occurs when your lender agrees to accept a lower price on your home than the current mortgage balance, provided you meet the lender's requirements and have a qualified buyer.

To prove your case, you'll need to spend some time on a cover letter explaining your hardship and provide full financial disclosure; the original purchase contract; a balance sheet of your income and expenses; asset statements, proof of income; bank statements; two years of tax returns; and a professional who knows the ropes.

Simply stating, 'My house is worth less than the loan and I don’t want to pay any more,' will not be acceptable. Lenders would rather foreclose than develop a reputation as an easy target.

Along with the required documentation, you stand the best chance of getting through the two- to seven-month short sale ordeal if the home is marketable; the second mortgage holder (if there is one) gets a cut or otherwise goes along with the deal; the same lender holds all mortgages; and there is enough time before foreclosure (at least about 4 months).

Don't count on a short sale if you can't prove hardship; you are current on your mortgage; are in bankruptcy; have recently completed a cash-out refinance or have a lien with a third party.

Because a short sale forgives a portion of the debt owed, that portion could be considered as taxable income and you should seek the advice of a tax attorney, certified public accountant, enrolled agent or other person fully schooled in the tax ramifications of a short sale.

According to FICO, the leading credit scoring system provider, there also may be some credit score implications.

You may also need legal and tax counsel. A solid professional team is best for determining the viability of the short sale, assembling the package and pricing and listing the property to find a buyer.

It’s a tough decision, but I am here if you need help!


Jane Loveday
Windermere Pacific Coast Properties
619-519-1615 Cell
http://www.JaneLoveday.com