Using the Short Sale to Stop Foreclosure

After reviewing your financial circumstances, it may become obvious that you can no longer afford your home. Many owners have often realized this and tried unsuccessfully for months to sell their home through traditional real estate methods or 'for sale by owner'. Market fluctuations and changes beyond your control, may not let you sell at a price that will satisfy the payoff of your loan. In a Short Sale, the bank allows you to sell your home to a third party such as Homeowner Resources, at a price which is less than the total amount that you owe. This statisfies the mortgage note you have with the bank and stops all foreclosure proceedings.

What is a Short Sale?
A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of purchasing your home from you, we purchase the property directly from your lender, and they in turn consider your mortgage paid-off. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $300,000. We make an offer to the lender to purchase your home for $220,000 cash, which is accepted as full payment for the loan. This is a short sale.

Why are they willing to take such a discount? Several reasons. First of all, banks do not like excess inventory and bad loans on their books; therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

Your lender will use the proceeds from the sale to pay off the mortgage and the remaining balance will be forgiven. This avenue is open for homeowners who are willing to part with their property but keep their credit rating with the least amount of negative reports.

Negotiating a Short Sale with the lender is a difficult process, generally because it is very hard to find the bank officer who has the authority to accept a discount. Much like getting your phone bill corrected, you can expect the process to involve a lot of waiting on hold and being bounced around an intricate maze of automated voice mail systems. Once you get in touch with the right person, then the hard work and the negotiating can begin.

Many short sales fall through for a number of reasons. We have successfully negotiated a Short Sale for many home owners and we know what the lender needs for approval and in what order.

If you would like to discuss working with Homeowner Resources to stop your foreclosure, please complete our contact form or call us at 360.850.1123. We want to help you get out of foreclosure and get a fresh start!