Real Estate Short Sales

The ideal candidate for a short sale will have a demonstrable inability to repay their mortgage loan as required. In other words, clear and convincing evidence will exist that demonstrates the borrower's financial hardships, as they relate to their mortgage loan. Before engaging in the short sale process, a borrower should evaluate his financial situation to ensure that a short sale is right for them.

The vast majority of the people who successfully engage in the short sale process are underwater, or upside-down, with their mortgage loans. Simply put, this means that they owe more on their house than what it is currently worth. Selling the house, then, is not a practical solution to the problem, since a sale will net them far less than what they currently owe. The first step in the short sale process is outlining the reasons that an existing loan can't be repaid (i.e. job loss, illness, adjustable rate mortgage and inability to refinance to fixed rate mortgage, etc.) and demonstrating its underwater nature.

Once a borrower is reasonably certain that a short sale is right for them, they need to open up the lines of communication with their lender. The biggest mistake that a homeowner can make is to cease communication with the lender. As soon as possible, a borrower should contact his lender to let them know that they are interested in a short sale. By doing this, the borrower shows that he is being proactive about the situation; he also gives a "head's up," of sorts, to the lender.

Next: Completion of Hardship Letter