What is a Short Sale?

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.  It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency

	Short Sale Process
	Call our office and set an appointment          You can contact us at (818) 996-7766.
	When you came to our first office meeting with the list of documents previously provided to you, we will analyze your financials and the value of your property.
	Review the short sale packet, fill-out information needed, collect list of documents needed.
	Our office will submit the initial packet to the bank then submit the purchase contract when we receive one. (Some banks do not accept shot short sale packets with out an offer, in those cases we will hold on to you packet until we obtain an offer)
	Standard Realty will list  and market your property and find a qualified buyer. The contract will be sent to the bank along with a HUD-1 outlining the cost for all parties involved in the transaction.
	The bank will order a BPO or a full appraisal to determine current market value.
	Once the results if the evaluation is given to the perspective lender(s), our experienced negotiators will start the negotiation process.
	After your short sale is approved and we have an approval letter at hand we will proceed to work with the buyer(s) and their agents to a success full closing. FORECLOSURE vs. SHORT SALE Homeowner Consequences  Issue Foreclosure Successful Short Sale Future Fannie Mae Loan – Primary Residence (Effective May 21, 2008) A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years. Future Fannie Mae Loan – Non Primary (Effective May 21, 2008) An investor who allows a property to go to foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years. Future Loan with any Mortgage Company On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?” this will affect future rates. There is no similar declaration or question regarding a short sale. Credit Score Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over 3 years. Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the scores as little as 50 points if all other payments are being made. A short sale’s affect can be a brief as 12 to 18 months. Credit History Foreclosure will remain as a public record on a person’s credit history for 10 years or more. Short Sale is not reported on a credit history.  There is no specific reporting item for “Short Sale”. The loan is typically reported “paid in full, Settled”. Security Clearances Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client has a foreclosure and is a police officer, in the military, in the CIA, Security, or any other position that requires a security clearance in almost all cases clearance will be revoked and position will be terminated. A Short Sale on its own does not challenge most security clearances. Current Employment Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is ground for immediate reassignment or termination. A short sale is not reported on a credit report and is therefore not a challenge to employment. Future Employment Many employers are requiring credit check on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment. A short sale is not reported on a credit report and is therefore not a challenge to employment. Deficiency Judgment In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment. In some successful short sale it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner. Deficiency Judgment (amount) In a foreclosure the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment. In a properly managed short sale the home is sold at a price that should be close to market value and in almost all cases will be better than an REO sale resulting in a lower deficiency. We assume no responsibility nor guarantee the accuracy of this document. We are not engaged in the practice of law nor give legal advice.

    Short Sale vs. Forclosure (Printable Version)

    click here for a list of documents needed to start your short sale 

    click here for a Letter of Authorization 

    click here for a Sample Hardship Letter 

click here for a list of Lender's Short Sale Package/Financial Statements
(if your lender is not on the list, please use the generic form)