Real Estate Short Sale FAQ




Collection of common real estate short sale questions asked by homeowners and agents:

What are the homeowner benefits of a short sale?
A short sale helps the customer avoid foreclosure and provides a planned exit strategy. The path back to home-ownership is generally shorter from a short sale than from a full foreclosure. In certain situations, a customer may be eligible for a cash incentive upon completion of a short sale (depending on investor requirements and eligibility).

Who are the parties involved in a short sale?
There are a number of decision makers involved in a short sale. These include the homeowner, the listing agent, the buyer, the buyer’s agent, the mortgage servicer, the investor who holds the mortgage, and in some cases, a private mortgage insurer and junior lien holders (such as a second mortgage holder or a local municipality or Homeowners Association that is owed money). All parties must be aligned before the home can be sold.

My loan is already in foreclosure. Can I still pursue the option to sell my home for less than I owe?
You may still be eligible. Even if your account is in active foreclosure status, you may still be able to sell your home for less than you owe to avoid foreclosure. Submitting a request does not stop the foreclosure referral, process or sale. A signed agreement of sale must be approved before the foreclosure sale date.

My loan is current. Could I be eligible to sell my home for less than I owe?
Yes, if you can demonstrate that you are struggling to make your payment due to financial hardship. Submit your request now to find out if you are eligible to sell your home for less than you owe and avoid foreclosure.

How should the buyer make an offer for a short sale?
All offers should be submitted by the listing agent and the listing agent must contact the Bank/Mortgage Owner short sale team.

Is there a benefit to being eligible for the government’s Home Affordable Foreclosure Alternatives (HAFA) program?
Eligibility under HAFA means that the homeowner can be approved for a short sale prior to an offer being received. The investor provides a price they’re willing to accept which helps to speed up the decision process once an offer is received. In addition, the outstanding mortgage debt is settled through the program and no legal action can be taken to collect the debt after the short sale has occurred.  Also, If homeowner qualifies to sell home for less than owed through the HAFA program, they may receive financial assistance to help with relocation expenses when the home if sold.

Can I sell my home for less than I owe if I have more than one mortgage on my property?
Yes, you may still be eligible. However, if your second lien is with a different bank than the first mortgage you will need to ensure that the owner of the 2nd mortgage loan approves the sale of the home.

Will I have to pay taxes?

Reducing the amount you owe, as well as any payments made to you under the program, may be reported to the IRS and may have tax implications. Please consult your tax advisor to discuss those implications.

How will this affect my credit score?
Cannot determine what impact principal forgiveness or the sale of a home for less than what you owe will have on your credit rating. It may have a negative impact. Credit bureaus that determine credit ratings will receive notice that your account was paid in full for less than the full balance. So, it will look much better than a foreclosure being recorded on your credit history but there is the possibility of the short sale have a slight negative impact to your credit score.

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