Navigating the Short Sale Process

Sep 16, 2013

If you’re facing foreclosure and can no longer afford your home, you may qualify for a Short Sale—even if you haven’t been able to (or think you can’t) sell your home. A Short Sale is an agreement with your mortgage company to sell your home for less than the outstanding balance of your loan. Often, the lender will agree to a Short Sale and not proceed with legal action against you for the amount of your loan not paid off by the Short Sale.

If you qualify for this option, the process is similar to a normal real estate sales transaction. You should work with a real estate agent (preferably with recent Short Sale experience) to market and sell your home.

Help for Fannie Mae Homeowners

If your loan is owned by Fannie Mae (find out), your agent should visit, an online Fannie Mae resource for listing agents with information about what to expect in connection with a Fannie Mae Short Sale. If your loan is owned by Fannie Mae, you may qualify for relocation assistance up to $3,000.

You should also contact your mortgage company to tell them you’re interested in a Short Sale. The mortgage company may request authorization to release information about your loan; information supporting your qualifying hardship; and access to your home for an appraiser and real estate professional to assess its value.

What to Expect

There are certain conditions you should understand about the Short Sale process:

  • You will need to confirm your eligibility for a Short Sale with your mortgage company and be prepared to provide details about the hardship that’s making it difficult to stay current on your mortgage.
  • The sale of your home must be an “arm’s length” transaction where parties involved are not related or affiliated by family, marriage, or commercial enterprise (business partners);
  • If the foreclosure process has already begun, pursuing a Short Sale does not automatically suspend the foreclosure process; and
  • There may be tax consequences if any portion of the outstanding mortgage debt is forgiven. Seeking legal and tax advice about this possibility is strongly recommended.

Be Patient

A Short Sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation.

And finally, if you are unable to sell your home, you may be able to transfer the ownership of your property to the owner of your mortgage (also called a Mortgage Release or Deed-in-Lieu of Foreclosure). With Mortgage Release, you may be eligible to receive relocation assistance and may be able to remain in the home for an agreed-upon time period to ease your transition to new housing.

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