The Short Sale Process – My Safety From Foreclosure?

The short sale process can be quite stressful on the homeowner. They are in the unfortunate position where their home is worth less than the mortgage - the short sale definition. Most homeowners allow themselves to approach dangerously close to foreclosure before admitting that the short sale process is something they'll have to deal with.

Before initiating the short sale process, both sides must agree to it. It is a contract between two parties as to exactly how the debt will be settled - with all of the various aspects of home ownership dealt with. Avoiding foreclosure is probably the consideration with the highest priority to the homeowner.

The two parties agree to the short sale, and then to all of its minute detail. They must agree to many things such as unpaid property taxes, the selling price of the home, the purchase agreement, the payment of the various legal fees, and the amount of the debt to be forgiven. It is extremely important to have professional assistance. Do NOT attempt the short sale process with professional help.

The homeowner will be required by the lender to complete a "hardship letter" which will document every aspect of the owner's financial trouble. The facts given will be documented by bank statements, pay stubs, and investment documents. This is how the bank will verify the events leading up to the borrower's inability to pay.

In the end, the short sale process is done for the bank to be able to keep its losses at a bare minimum. For this reason the lender must have the home appraised by real estate professionals in order to to assess the fair market value. It is all about the bank trying to recover as much of its money as possible.

Once the home is sold per the agreed upon terms - the proceeds will be issued to settle the debt. The bank is not required to wait for any time longer than stated in the agreement. They do not have to - nor WILL they - wait forever! If not sold as per the contract - they may proceed with the foreclosure. All of these points will be stated clearly in the contract.

If handled correctly - with professional assistance, your credit does not necessarily have to be damaged. There are many complex issues involved in the short sale process, and many people have missed deadlines dealing directly with issues relating to credit. For these reasons their credit rating was damaged. Some people have other areas of financial responsibility tangled up in their current problems and for this reason end up with damaged credit. The point is that damaged credit is not a foregone conclusion. If we follow the instruction of the experts advising us, our credit rating may well be saved..

If we successfully complete the short sale process we could very well end up with little damage. If we do it right, we could still have stable credit, no legal fees or unpaid property taxes, and no foreclosure! This would be our prize - to be in the best position humanly possible to buy another home.