Short Sale Approval

Obtaining short sale approval from mortgage lenders is a tenacious task. In order to improve chances of success it is imperative to be prepared and organized. The first step involves contacting your lender to determine if your property qualifies for this type of real estate transaction.

When mortgage lenders grant short sale approval they agree to accept less than the balance due on the loan. A bank loss mitigator is assigned to manage your account. Loss mitigators are not the decision makers; however, they can be instrumental in helping you obtain a successful outcome.

Although each bank adheres to their established short sale protocol, most have similar requirements. The following eligibility requirements can assist you in determining if you could be a candidate for short sale approval.

1) Your property value is less than the unpaid balance of your loan. Property values can be obtained by having the property appraised or by obtaining comparable home sales reports. Comp reports can be downloaded from Realtor.com, through local realtors, or by conducting online research. Comparable home sales reports provide prices of properties listed for sale or recently sold in the area where your home is located.

2. You must be at least 31 days delinquent on your mortgage note.

3. You cannot have any accrued equity in your property or own assets which could be used to cure mortgage arrears or repay the loan.

Making Home Affordable is a government sponsored program that offers a variety of programs to help struggling homeowners. Borrowers whose loans are backed by Fannie Mae, Freddie Mac, or participating MHA lenders can apply for real estate short sales.

Visit my Making Home Affordable Hub to learn more about this program.

Mortgage lenders usually offer a variety of options prior to granting short sale approval. One of the most common is loan modification. Lenders can make modifications based on the borrower's ability to cure arrears and maintain future payments.

A second option is that of mortgage refinance. With today's credit crisis, refinancing is increasingly difficult to obtain because banks are not lending to borrowers with blemished credit.

Short selling requires borrowers to locate a buyer for their home within a short period of time. Some banks require homeowners to have a signed sales contract before they will even discuss the option of short selling. Others will allow borrowers to list their property through a realtor and grant them two or three months to locate a buyer.

Short sales are complicated and may require the services of a real estate lawyer or short sale specialist. The process generally takes four to nine months to complete. Much depends on the caseload of the lender and if the borrower has two or more mortgages. When property is secured by a second mortgage loan, both lenders must agree to grant the borrower short sale approval.

When borrowers do not qualify for any of the above options, foreclosure is inevitable. The best line of defense is to obtain a deed in lieu of foreclosure, which allows borrowers to hand the keys to their home over to the bank.

Under Making Home Affordable, qualified applicants for short sales or deed in lieu can obtain up to $3000 in housing relocation funds.

If you have fallen behind with your mortgage payments it is imperative to contact your lender immediately. Short sales are not available once properties fall into foreclosure, so time is of the essence.