Broker Assoc / Short Sales Consultant
Charles Rutenberg Realty
1545 S Belcher Rd
Clearwater FL. 33764
|What is a Short Sale?
A short sale is a sale of real estate in which the proceeds from selling the property will fall short of the balance of
debts secured by liens against the property and the property owner cannot afford to repay the liens' full amounts,
whereby the lien holders agree to release their lien on the real estate and accept less than the amount owed on
the debt. Any unpaid balance owed to the creditors is known as a deficiency. Short sale agreements do not
necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically
agreed to between the parties.
A short sale is often used as an alternative to foreclosure because it mitigates additional fees and costs to both the
creditor and borrower. While credit is also typically damaged much less than from a foreclosure, both often result in
a negative credit report against the property owner.
Most creditors require the borrower to prove they have an economic or financial hardship preventing them from
being able to pay the deficiency.
Creditors holding liens against real estate can include primary mortgages, junior lien holders—such as second
mortgages, home equity lines of credit (HELOC) lenders, home owners association HOA (special assessment liens)
—all of whom will need to approve individual applications for a short sale, should they be asked to take less than
what is owed.
Most large creditors have special loss mitigation departments that evaluate borrowers' applications for short sale
approval. Often creditors use pre-determined criteria for approving the borrowers and the terms of the sale of the
properties. Part of this process typically includes the creditor(s) determining the current market value of the real
estate by obtaining an independent evaluation of the property with an appraisal, a Broker's Price Opinion, or a
broker opinion of value (BPO). One of the most important aspects for the borrower in this process is putting
together a proper real estate short sale package including hardship letter explaining why a short sale is needed.
Depending on each creditor's policy and the type of loan, creditors may accept applications from borrowers even if
the borrower is not in default with their payments. Due to the overwhelming number of defaulting borrowers due to
mortgage failures and other causes as part of the 2008–2012 global financial crisis, many creditors have become
adept at processing such short sales applications; however, it can still take several months for the process from
start to finish, often requiring multiple levels of approval.
For more information call:
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