FAQ’s About Short Sales


What is a Hardship & Do YOU Qualify?
What is a Real Estate Short Sale?
What are the benefits of a short sale?
What are the advantages of a short sale vs. a foreclosure?
What is my potential liability after completing a short sale?
I’m facing foreclosure, do I still have time for a short sale?
If I file bankruptcy, can I still qualify for a short sale?
How much will it cost to do a short sale?
What paperwork will I need to provide?
If my mortgage is still current, will my lender consider a short sale?
Is a short sale still possible if I have more than one loan on my property?

What is a Hardship & Do YOU Qualify?
  • Failure of a business
  • Employment Relocation
  • Recent adjustment in mortgage payment
  • Unable to Refinance
  • Increasing credit card debt and/or monthly expenses
  • Recent property damage and/or property requiring extensive repairs
  • Any other unforeseen circumstances that may cause financial hardship
  • Recent Unemployment or Reduction of Income
  • Divorce or Separation
  • Death of a Spouse
  • Disability or inability to work due to a health condition
  • Overwhelming medical bills
  • If you answered Yes to any of the above, you qualify.

    What is a Real Estate Short Sale?

    A short sale occurs when you can not afford to live in a home that is worth LESS than what you owe on your mortgage. Your lender will allow you to sell your property at an amount less than that due on their loan.  A win-win solution for both parties, a short sale offers an optimal alternative to foreclosure for distressed homeowners and save banks the expense and hassle of the foreclosure process. Not to mention you get to save your credit from a foreclosure or bankruptcy.

    What are the benefits of a short sale?

    For homeowners facing foreclosure, short sales are a beneficial alternative.  A short sale will:

    1. Relieves you of the responsibility over the property with considerably less credit damage than foreclosure.
    2. You will not be burdened by any up front costs with a short sale.
    3. All fees including closing costs, broker commissions and escrow fees are covered by your lender.
    What are the advantages of a short sale vs. a foreclosure?

    The main advantage of a short sale is preventing foreclosure.

    Short sales are considerably less damaging on credit ratings than foreclosures.  Remaining on your report for up to 7 to 10 years, a foreclosure is often times deemed more damaging than a bankruptcy, and may cause you to wait up to 3 years to re-qualify for a home loan at a sensible rate.  Short sales may report on your credit for up to 3 to 5 years however, are noted as “pre-foreclosure in redemption” and are spared the more harmful “debt discharged due to foreclosure” marks.  Individuals have successfully recovered from a short sale and re-qualified for a reasonable home loan within 18 months.

    What is my potential liability after completing a short sale?

    Short Sale allows you to sell your property for less than the outstanding mortgage debt.  You may think that you are liable for the difference when actually it can be written off as a forgiveness of debt by the lender.  Under the Mortgage Cancellation Tax Relief Act of 2007 (H.R. 3648) any amount forgiven on a mortgage debt secured by a principal residence can not be taxed.  We recommend that you seek the advice of an attorney or your CPA.

    I’m facing foreclosure, do I still have time for a short sale?

    Each situation is approached with measures necessary according to your needs, so every file dictates their own timeline. On average, from the time American Family Short Sale presents a completed short sale package to your lender, it can take 1 to 4 months, depending on the situation.  If time is of the essence, and you are facing foreclosure or have a set auction date, we can expedite your request and negotiate your lender to postpone those dates.

    If I file bankruptcy, can I still qualify for a short sale?

    Bankruptcy is typically used as a last resort causing a temporary delay in a foreclosure situation.  We strongly suggest you view this following site for more information.
    http://thedebtfreelawfirm.com/bankruptcy.html

    How much will it cost to do a short sale?

    Nothing. All fees, including title, escrow, closing costs and real estate commissions will be paid by your lender at closing.

    What paperwork will I need to provide?

    Your lender will want a letter explaining your hardship which is preventing you from affording your property.  Along with the hardship letter, all lenders require the following documents:

  • Financial Statement
  • Recent Bank Statements
  • Recent Pay Stubs
  • Last 2 Years Tax Returns
  • Other Related Items
  • Once received, American Family Short Sale will put everything together and submit it to your lender for immediate approval.

    If my mortgage is still current, will my lender consider a short sale?

    There are lenders that will not accept a short sale file until the loan is delinquent, and there are some that will approve files on loans still current.  If you find yourself contemplating a short sale, at no cost or obligation we can get your file started and contact your lender for their specific requirements. We are just a Click Away!

    Is a short sale still possible if I have more than one loan on my property?

    Yes.  We will negotiate with both your lenders.