Home Buying in Springfield>Question Details

Noemi De Leon, Home Buyer in Springfield, MA

What is a short sale?

Asked by Noemi De Leon, Springfield, MA Sun Aug 17, 2008

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A short sale is when the bank agrees to let you sell your property for less than what is owed on the mortgage, forgiving the balance of the debt. It damages your credit score but doesn't do as much damage as a foreclosure. There are prerequisites for short sale agreement, such as you must be late with your payments and making your payments creates a hardship, which you will have to prove. Each bank has its own procedures for short sale. Contact the Workout Group at your bank. If you have more than one mortgage with more than one bank then contact the bank that holds the first mortgage. When you submit your expense sheet (another criteria for SS) you will include any other mortgages. You and your buyers must be patient, the bank's decisions take a long time. For help with a short sale go to http://www.reoshowcase.com. Good Luck!
0 votes Thank Flag Link Sun Aug 17, 2008
For a complete explanation of everything you need to know about short sales in Massachusetts see the link below. This will answer most questions a buyer or seller may have regarding short sales.
0 votes Thank Flag Link Mon Jun 1, 2009
In most cases, a sale is only "short" if the seller cannot afford to make up the difference in what they're selling it for and what they owe to close out the existing mortgage. Obviously if you will owe money but have the money to pay, it's not an issue.

What makes these complicated in a lot of cases is banks have to decide that they are willing to close out the loan for less than they are owed. Since, in many cases, the interest over the life of the loan has still allowed the bank to earn a profit on the loan it is simply a case of the seller going through the steps to get bank approval. The last thing a bank wants to do is own property, especially these days.

As a buyer, it's important for you (and your agent) to look at the loans on record at the registry of deeds to make sure you know the financial situation of the seller. A short sale can delay the process and many times rate-locks can be at risk or a house/apartment you are leaving needs to be vacated before the process can be completed at the bank's end.

Finally, inspections are CRITICAL on potential short sales because anyone who has not been able to stay ahead on their mortgage might have needed to cut corners on long-term maintenance.
0 votes Thank Flag Link Sun Aug 17, 2008
A short sale is when the seller owes more on a property than they are selling it for. It requires approval from the bank who holds the mortgage.
0 votes Thank Flag Link Sun Aug 17, 2008
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