WHAT IS A SHORT SALE?
A "Short Sale" or "Negotiated Settlement" or "short pay" occurs when a Lender agrees to accept less than the amount owed to payoff a loan. If the property is worth less than the amount owed on the loan, the Lender knows they are going to take a loss if they foreclose. My job is to convince a Lender they will "do better" if they take less than what is owed now rather than taking the property back by foreclosure.
HOW LONG WILL IT TAKE?
The Short Sale negotiation process is a lengthy one. It may take several weeks or several months to get an approval. Many Lenders have several layers of bureaucracy, insurers, and investors that we will need to navigate through in order to get a Short Sale approved. Patience is important during this process.
CAN I STAY IN THE HOUSE?
The purpose of a Short Sale is to get the property sold. Upon closing, you are expected to vacate the property.
WILL I GET ANY MONEY FROM THE SALE?
No. A universal requirement of all Lenders in granting a Short Sale is that the borrower will not receive any proceeds from the sale of the property. The Lender is going to take a loss on your loan. They will not allow you to walk away from the closing with funds.
WHAT HAPPENS IF THIS DOESN'T WORK?
If you have exhausted all other options such as Loan Modification, a Short Sale is an attempt to avoid foreclosure. If it doesn't work, your home will likely go to foreclosure.
WHAT IS A "RELEASE"
A Lender may offer to "release" its security interest against the property in exchange for less than the total amount of the note. A release will allow the property (the collateral) to be sold without paying off the obligations of the note. However, the note is not satisfied. A successful Short Sale will allow the property to be sold and thus avoid foreclosure. The Lender is aware that the remaining debt on the property (deficiency) still exists and they may hold you liable for the remaining amount due on the note.
WHAT IS A "SATISFACTION"
A Lender may agree to accept less than is owed as complete and total satisfaction of the note and release its lien against the property. Advantage: Your note and obligation to the Lender are satisfied for less than you owe. When the property is sold, the debt is paid off completely. Disadvantage: You may have some tax consequences that you should discuss with your tax advisor. This occurs because the Lender is making money you owe disapear. Your Short Sale Negotiator, this can be your Realtor or Attorney, are successful in obtaining a "Satisfaction". Sometimes, all they can get is a "Release".
WHAT IS A SHORT SALE?