Short Sale

Short sale is a term which refers to the process of making a deal with your current lender to allow you to pay less than the balance owed on the mortgage to get out of the property without going through a foreclosure.

A shortsale could save you from completly damaging your credit. One main part in a shortsale is working with an expert that is knowledgeable on excuting shortsales. The lender does have to approve the shortsale, and will send out BPO to determine the value of the home.

The foreclosure process can cost a lender a significant amount of time and money, so they may be more willing to accept a short sale than begin a lengthy legal proceeding.

The Preforeclosure Sale (PFS) Program allows the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed.

You should consult a tax professional about tax consequences of a short sale, especially if you have not declared bankruptcy. The lender may issue you a 1099-A for the difference between the amount owed and the amount you settle for with the short sale.

Short sale documentation would be similar to that of getting a new mortgage. But also will include information regarding the exsisting state of your properties market.

» DISCLAIMER: The information contained in this article on 'Short Sale' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.