Hello Valerie. I can understand that you don't know whom to believe. The truth is that every lender unfortunately handles short sales different. While all of them require a hardship letter, there does not seem to be a consensus about what constitutes a qualifying hardship. While there are some more obvious hardships (e.g., illness, job loss, divorce), it's really hard to predict what the lender will consider a qualifying hardship. It is my impression that the lender will be more lenient if the offer is close to what the lender opines to be the fair market value. The worse the offer, the more stringent they seem to be with the hardship requirements, which I guess makes a certain amount of sense.

It is correct that some lenders will not talk to you about a short sale or any other relief until you are behind with your payments. A client of mine was given the same information by her bank.

Since I don't know what answers you received from the three real estate agents, I can't comment on which answer may be closest to reality. Most likely, the three answers are based on the experience of the three agents and since every lender handles short sales differently, it's entirely possible that you are getting three very different answers.

While your lender may tell you that they won't negotiate with you until you are 2 months behind, they may very well be willing to tell you what kind of documentation they'll require with a short sale package. Many lenders will e-mail or fax you the short sale requirements. If the first customer service rep does not want to give you the short sale information, call back until you get someone on the phone who will send you the information. While this will not tell you what the lender will consider a qualifying hardship, it will give you an idea of what kind of documents you'll have to gather in support of your short sale request. While the lenders will require financial information, not all require that you submit tax returns or paystubs.

I would highly recommend that you hire a real estate professional who has successfully negotiated a few short sales. The agent will need you to sign an authorization letter so that the lender can talk to the agent about your loan and the agent can also find out what the lender's short sale process is. The sooner you hire an agent the better because time is of the essence. Ideally, you get the property on the market before a notice of default has been recorded. This will give the agent time to market the property and find a buyer. Being able to show that the property has been marketed properly is helpful to support a claim that the property could not be sold for more than what the offer is for. For instance, if the property has been on the market for 3 months and price reductions were done once a month, this will show that the property was offered at a higher price but did not attract any buyers at the higher price.

You also want to know about any liens that may be on the property (tax liens, mechanic's liens, utilities liens, etc.). Typically, the banks will pay liens on the property, but it is also possible that they are not willing to pay for certain items. I recently negotiated a short sale in which the lender was not willing to pay for a utilities lien of over $600. If you know that the lender will not pay certain items, you know that either you, the seller, has to come up with the money or you have to ask the buyer to pay for those items as well.

There are many little things that come into play in short sale transactions and it is impossible to discuss every possible scenario here. My final advice to you. Hire an agent now and don't try to take on the short sale process on your own (the lender will pay the commissions - they may limit the commission amount, but agents who get involved with short sales know this). Good luck to you.

Valerie....

I am sorry to hear about your dilema. I wanted to add a few more things that will be necessary before any lender approves a short sale you will need to prove hardship. They will require two years tax returns, 2 months bank statements, complete financial statement and a hardship letter.

For a good understanding of short sales visit the neighbors in need link on the chooseahomenow website.
The big mistake people make is thinking the home qualifies for short sale, when in fact it is tho owners situation and not the home that has to meet the guidlines.

Hi Valerie,
I am sorry sorry you are in this position. You have been given good advice here. I'd like to add that you should find an attorney who is experienced in short sales, foreclosures and workouts. Besides using an real estate professional, an experienced attorney will have worked with various banks and have ideas how to proceed with proper offers. They will also be representing you and helping you through a difficult ordeal. You want as many people on your side right now.
Good luck.

In our market, the home must be listed and an offer must be received BEFORE the mortgage company or bank will consider letting it be a short sale. So here, you must start the process by listing and exposing your home to the market.

This is definately an area where you want good real estate advice. Have at least 3 agents who specialize in short sales come out and do a Market analysis and a Seller's Net Sheet for you. There should be no charge for this--be upfront that you are looking for information, and that you are asking other agents. That is how you keep us agents on our toes!

Don't make any decisions until you have spoken to at least 3 agents in your market. You can speak to their brokers as well.

The short sale process is usually long and can be complicated. Good luck and keep us posted on your progress!

Valerie,
first, I'm sorry to hear that you are in this position. If you definitely see that your financial situation may lead to you losing the house, or continuing to fall behind on your payments- you may want to consider trying a short sale.
Since this can be more difficult sales process, you will want to have an Real Estate professional assist you, but make sure that you find out how many short sales they have done. This is not something that you would want a novice doing. You will want to get all your financial information together.
Since the lender will want to know the reason for the short sale, they will want to know if you have any funds available to pay any deficiency.
It is your decision, but I would probably advise you to at least discuss your options with a Realtor that you are confident in. Depending on your local market, it may take some time to get an offer. But at least have your paperwork together for when it happens.
All the Best to you.

Valerie: Every lender is different, some will deal with you before you are delinquent to spare the foreclosure and some will only work with you after you have got behind. Doing a short sale yourself is something I would not suggest. I would pick an agent that has a lot of experience doing it because that could be the difference between the lender accepting a decent offer or asking too much for the house. If you do decide to work on the short sale yourself some of the things the lender will ask from you is: recent pay stubs, tax returns, financial and bank statements, and hardship letter explaining why your in the position to stop paying and why they should accept what you are proposing. Also, typically they will need an offer to purchase to work on your short sale file.

If you decide to have an agent help you with the short sale ask them how many they have successfully closed. Do research on them because your house is in their hands. No matter which way you go always tell the potential buyers the process may take a while.

To short sale you house you have to prove a hardship that makes it that you cannot afford your mortgage payments and pay your other bills. There are short sales that are approved based on "imminent default" if you can show a hardship is not here yet but is coming http://www.stoppalmbeachforeclosure.info

If you are in Los Angeles, Ca and surrounding areas, please visit http://www.Short-Sale-Vs-Foreclosure-Help.com for information or contact me directly at 818-903-2040.

Thanks,
Sara Mehrpouyan CDPE
Rodeo Realty
818-903-2040
Dre License #01712757

Hi Valerie, I am sorry for what you are going through. I have done many sjort sales and am a CDPE (certified for doing short sales).
In my experience the lack of trust you have will be your worst enemy. Real estate deals work best when my client trusts me completely even though there are many things about short sales that do not make sense. The banks are each different, and some are not even worth attempting a short sale with. Many people think the agents are only operating on the basis of $$$$. Most of the agents I know hate doing short sales and some won't even do them. For us, it is difficult to watch the suffering of our clients while we have little to no control of the outcome and often we end up getting paid nothing after months of hard work. Sometimes the clients take out their frustration on us as well. My best advice is to look for an agent you can absolutely trust, follow their expert counsel and try not to be angry that they too are just trying to do their job, and Expect to be paid for it.

Yes, you are in a tough spot, but, once you put this house in your rearview mirror, you can rebuild. You will be able to own a home again and there is help for credit repair as well. I wish you the best! Dawn Ohnstad, Realtor, Coldwell Banker Burnet

Seriously, everything you need to know is in this book!

http://www.help-me-short-sale-my-house.com

WHAT TO EXPECT in a Short Sale?

1. The lender will want to see your entire financial picture.

2. The bank may want you to sign a promissory note for the deficiency between the amount owed and the amount your home is sold for.

3. As the seller, you cannot receive any proceeds from the sale. None. Period. Your Realtor and title company may have to work for reduced fees.

4. The banks are overwhelmed with short sales and many times a decision can take up to 60 days or longer.

5. The property may be foreclosed on during the short sale process. Be sure to use an experienced short sale company who should be able to get the foreclosure postponed.

6. Do not expect to receive information on a regular basis, as there may be weeks that go by without news from your lender.

7. The bank will want to get a BPO (Broker Price Opinion) and/or an appraisal of your house.

8. Be patient. This is the best policy. Try to avoid being stressed out over something that you are not able to control.

The process is very complex and highly specialized. The 1st step should always be to choose a good experienced short sale specialist in your area to help you at no cost:

Short Sales are More Valuable Than Ever!

Avoiding foreclosure is always a smart move, but now there are incentives that make it an even better one.

Short sales and deeds-in-lieu are dignified solutions to foreclosure, and now the government is making them easier and quicker through the Home Affordable Foreclosure Alternatives Program, or HAFA, which also gives the homeowner $3,000 for participating.

I have made a FREE REPORT decoding HAFA and how you might qualify. You can download it here:
http://www.StopForeclosureHelpToday.net

If you or someone you know is facing foreclosure, know that there are better options and very strong reasons
to pursue them. My services are absolutely FREE to you.

Oh, Valerie, it's such a confusing and volatile time for everyone in the real estate market. It's a good idea to talk to an agent who specializes in short sales. They usually have a good legal team helping them with the negotiations with the bank. Depending on who your mortgage company is, you may not get any straight answers from them either. The answers may change with each person you speak to. That's why, when you have a legal negotiator, they will establish contact on your behalf with someone at your mortgage company.

The thing is, you need enough information just to make a decision!!!! Talk to some people you trust (i.e. friends, family, etc.) to get the name of a good real estate agent. Even if that agent doesn't do short sales (I don't), they will be able to listen to your needs and get you to someone who will give you the answers you need to decide. Now, here's the thing, the reason you're getting so many answers is because there are a variety of ways these things get handled. So, there is no WAY-IT'S-ALWAYS-DONE in short sales. There area a several ways this thing could go down.

Patience and perseverance is the name of the game with short sales. Good luck!

The Government has created the Home Affordable Foreclosure Alternatives Program (HAFA). This new
program offers $3,000 for successful short sales and lets YOU move on from mortgage debt. Simply
put, this program is designed to streamline foreclosure alternatives and provide YOU with real solutions.

I have made a FREE REPORT decoding HAFA and how you might qualify. You can download it here:
http://www.StopForeclosureHelpToday.net

If you or someone you know is facing foreclosure, know that there are better options and very strong reasons
to pursue them. My services are absolutely FREE to you.

The laws are different in every single state. I have been in the short sale industry for nearly 7 years now, BEFORE the crash happened. Many of the posts on this thread are not correct for several different reasons. If you have ANY questions at all, PLEASE to not hesitate to send us an email and someone will contact you with a reply in a timely manner. Best of luck!


shortsale.laws@gmail.com


J. Meacham

Michigan Real Estate Law -
This is a short excerpt from The Michigan Association of Realtors Legal News. I quote:

"...typically, if they quit making payments on their mortgage, their lender
will not begin the foreclosure process until the third month of non‐payment, at the earliest.
Thereafter, the lender must publish a notice of foreclosure in a countywide newspaper for four
(4) weeks. The foreclosure sale will be held at the county courthouse on the fifth week.
Thereafter, assuming they are living in their house, they will have a six month redemption
period. Callers are usually relieved to learn that even if they do not make another mortgage
payment, they may stay in their house for at least nine months. (If a caller indicates that his
house is situated on more than three acres, the caller is even more astounded to learn that his
family may remain in their home without paying the lender anything for at least fifteen (15)
months, as their redemption period is one year.)
Callers typically then want to know what a “short sale” is and whether they
should try to do a short sale. The concept of a short sale is explained to them very simply. A
buyer is obtained for the property and the lender agrees to accept less than the full amount of
the indebtedness owed to the lender. If there are second and third mortgages, those lenders
will also have to be satisfied in order to obtain discharges of their mortgages. If the short sale...."
(End of quote.)

It's difficult to sift through all the well-meaning advise. I hope this is helpful. You may want to contact a local attorney who specializes in short sales and foreclosures.

Best,
Shari

If your lender is telling you that you must be two months behind before they will consider a short sale, then that is the company you should believe. However you must contact the sup of your mortgage company to see if those are in fact the rules. I never heard of a company requiring 2 months, most require 31 days. If you want to know more about short sales you can go to my reference to get more details.

One thing to remember is you must have a complete package for your lender to consider a short sale and you can't sell your house to your friend, family remember or neighbor.

Valerie:

The Cotten Team specializes in listing short sales. You can visit our website, http://www.PreventForeclosureMN.org for specific information on Short Sales. If you need more answers or would like to discuss your situation further you can contact us through the website as well. Every lender treats a short sale differently. When you find a realtor to list your home make sure he/she has experience dealing with lenders and submitting short sale applications so the process goes as smooth & quickly as possible. Once that agent has your home listed they will make the contacts with your lender so you don't have to.

I feel your pain! This is a very complex situation and you need to find someone licensed in your state. Your profile says Michigan but you are asking this question in the section for Plymouth Minnesota. So that needs to be cleared up before you can really go any further. Where is your property located?

Also, which "straight facts" are you looking for? What exactly do you want to know:
* What this will do to your credit rating?
* How long will it take?
* How long will it be before I can purchase another home?
* What is the process like?
* How long can I stay in my home?
* Am I going to be able to make anything off of the sale?
* All of the above!

I have information on my website that is specific to Minnesota. If you property is in Plymouth Minnesota, check out these links to get started:
http://pattiannkasper.com/foreclosure_part_1_81832.html
http://pattiannkasper.com/foreclosure_part_2_81833.html
http://pattiannkasper.com/foreclosure_part_3_81834.html

A big part of the problem is that every bank and lender is completely different. They all have different procedures and will impact your credit rating differently. Some have committees that make decisions and others assign a loss mitigator. Some have to run everything past their group of investors and others don't.

On top of that, the laws are different in every state. Some states are very consumer friendly (like Minnesota) and others are not. Some states are "foreclosure by advertisement" states, others are "judicial foreclosure" states, and some states like Minnesota, allow both.

The following facts make it very difficult for everyone involved.
* Lenders will not consider a short sale until you are deliquent.
* Most lenders will not even speak to your real estate agent until they have a purchase agreement from a buyer.
* Some lenders need to get approval from their investors before they can approve a short sale.
* Many lenders take up to 2 months to assign a loss mitigator to your file.
* Most loss mitigators are overwhelmed with the sheer number of files they have to process.
* Some loss mitigators are young and lack expedrience - some have never owned a home of their own.

Here are some GENERAL answers based on my experience as a REALTOR in Minnesota doing short sales:

What this will do to your credit rating? This is really impossible to say because so many things go into the calculation of your credit rating. In general, it is going to hurt less to do a short sale than a full foreclosure, but beyond that, no one can say how many points your credit score will drop. On top of that, different lenders will place different notes on your credit report. When I do a short sale, I ask the lender to place a specific note on the credit report (one that is in YOUR best interest) but they will not use wording that makes it look like you paid the home off in full. They have the right to put whatever notes they see fit on your report. If someone claims they can tell you EXACTLY how many points you will lose, I would be suspicious. And if they ask for money up front, contact the Minnesota Attorney General and ask them to check on that company or person. Chances are they are running some kind of scam.

How long will it take? This varies from lender to lender. Most of the short sales I have worked on take 3-5 months from the time a purchase agreement (from a buyer) is submitted to the lender. It can take 2 months just to get the file assigned to a loss mitigator. Then a month or two for the loss mitigator to get investor approval and do the appraisals they need. Then it can take up to a month to clear the title and negotiate the price (the lender might counter-offer). If a 2nd mortgage is involved that can add to this timeframe. If mechanics leans, unpaid water bills, unpaid taxes, deliquent library fines (yes, I said library fines), or any other liens against the property are involved this can add to the amount of time it takes from beginning to closing. This doesn't even include the time it can take to attract a buyer or find another buyer if the first one decides it is taking too long and cancels their offer.

How long will it be before I can purchase another home? Again, its impossible to say because its based, at least in part, on credit scores. A general rule of thumb for most people who actively try to recover their score after the short sale and make all of their other payments on time is said to be 3 to 5 years. But no one can say for sure, it can be up to 10 years. The FHA guidelines have recently changed, but the "unknown factor" is still going to be your credit score and future payment history.

I am running out of room here... But I hope that helps!

Best to stay away from any investor you run into. Choose a realtor with much experience in working short sales, who is familiar with the practices of your lender as well. You will get different answers from everybody. The best one I can tell you is be patient, and you never know until the approval letter is in hand. Here is a good resrouce for choosing a short sale specialist in your area

This is a complex question and that is why you came here. If your mortgage company states that you must be 2 months late before they will talk to you may and most frenquently is different when an agent or an attorney get involved. The bank is swamped with short sales and they do not want to have to do them. Some of the banks have already passed the point of no return and will discuss with the homeowner yours does not seem to be such a company. Ask a different question of your bank. Ask them if they would re-negotiate or re-cast the loan if that is what you are looking to do. Sometimes they are different departments. Tell them your circumstances and why you need help. All short sales and workout programs do require a hardship of some kind.

It is a very complex question and can not be answered and should not be answered in a community forum. We have 50 sellers that we are doing short sales for right now and many of them have different situation and we handle each one different. Each lender is different. Some lenders will work better with you if you are paying, some will not. Some lenders will not work with you if you have missed payments. Most of my clients in short sales do not have the money to pay a lawyer so we try and help them the best we can. The best thing you can do is have someone that knows the process working with you and your lender. Ask for a list of successful short sales from the agent before you let them in your door. If they can not provide it, find someone else.

http://www.stopmyforecloSureonline.com for more information No hard CloSe