What is a 'short sale'?
A “short sale” is an option for a homeowner to avoid foreclosure when they can no longer afford the mortgage on the home. In a short sale, a servicer allows the borrower to sell the property at its current value, even if the sale nets less than the total amount owed on the mortgage. In order for a lender to agree to a short sale, most require the borrower to list and actively market the home at its fair value. The sale must be an arms length market transaction with all proceeds (after selling costs) applied to the discounted mortgage payoff.
Short sales can sometimes be complex transactions involving careful coordination and close cooperation among a number of parties -- servicers, appraisers, borrowers, purchasers, real estate brokers, title agencies and often mortgage insurance companies and junior lien holders. A short sale usually provides a better outcome for borrowers, investors and communities. However, due to the complexity of and time required for completion of these transactions, servicers historically have often opted to pursue foreclosure instead, even where a short sale would have provided a substantially better outcome for borrowers, investors and communities. During the financial and housing market crisis, though, lenders and servicers are more agreeable to reasonable short sales.
Other Avoid Foreclosure FAQs
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Q:
What are the eligibility requirements to refinance under the Making Home Affordable Plan?
A: You may be able to refinance your mortgage under the Making Home Affordable Plan if: • You are the owner occupant of a one to four unit home; •The … More -
Q:
How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?
A: You should call your mortgage lender or servicer (the organization to whom you make your monthly mortgage payments) and ask about the program. Both Fannie Mae and … More -
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How long do I have to try to sell my house as a 'short sale'?
A: it depends on your lender's requirements and whether you qualify for any special government sponsored programs helping homeowners avoid foreclosure. … More -
Q:
I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?
A: You may still be able to refinance your home under the Making Home Affordable Plan even if you owe more than your property is worth. Eligible loans will include … More -
Q:
Can any property be sold as a 'short sale'?
A: typically, if there are any junior liens, mortgages or other debts against the property, those must be cleared first before the property can be sold as a … More -
Q:
Will refinancing lower my payments?
A: Refinancing your home often will lower your monthly payments. However, whether your payments are reduced may depend upon how your home is refinanced and whether … More -
Q:
Why Would a Lender Agree to a Short Sale?
A: Banks and other lenders generally agree to short sales in order to avoid having to foreclose on a property and take it into their inventory. Most lenders would rather … More -
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Will refinancing my mortgage under the Home Affordable Refinance Program, or other programs, reduce the amount that I owe on my loan?
A: Refinancing your mortgage under the Home Affordable Refinance Program will not reduce the amount you owe on the mortgage. The objective of the Home Affordable … More -
Q:
What is a Short Sale?
A: A short sale is where a homeowner sells their home for less money than they owe on the property. The owner of the home negotiates a discounted payoff with their … More -
Q:
How do I apply to refinance my mortgage under the Home Affordable Refinance Program?
A: You should call your mortgage servicer or lender and ask about the Home Affordable Refinance application process. The number is on your monthly mortgage bill or … More
