A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property.  The best part, the existing lender pays virtually all closing costs, including commissions and unpaid property taxes.

Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to aking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure.

• What are my options?

If you really want to stay in the property, you can try to do a loan modification before committing to a short sale.  At that time you can ask the lender if they would consider a deed in lieu of foreclosure (usually only effective if there is only one lienholder).  Otherwise, consult with an attorney to find out if a short sale or foreclosure would be better for your situation.

When you talk with any type of attorney, make sure to give them as much information about the loan(s) as possible, including what you got the loan for (purchase, refinance), if there was any cash out and what the cash was used for, etc.  The more information you can share with them, the more they can help you.

A loan mod is a procedure in which a loan's terms, such as the interest rate, monthly payment or term, are altered with the approval of a lender.  It is usually not a good practice to pay a company up front for this service and a homeowner can try to do it themselves.

You may have heard talk about the HAMP program and can get more details by Calling us at (805) 845-7722 for a free loan mod consultation

Job loss, substantial reduction in income, divorce or split of domestic partners, job relocation, illness or injury in the family or extended family – particularly if it forces relocation, or death of the co-borrower are all considered hardships. The fact that your property value has decreased or your payments are going up does not constitute a hardship if not accompanied by another criteria affecting income and the ability to pay.

A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file. We supply hardship lettersfor you to use as a guide.

In most cases you will pay literally no sales costs if your lender approves the short sale as all closing costs, including past due property taxes, are usually paid by the lender as part of the short sale approval.

Short sales are considered "as is" so the lender usually will not cover any repairs. But don't count on them paying delinquent HOA fees/fines/penalties.This is considered a personal debt so we strongly suggest you continue to pay your HOA dues.

The lender may require the Seller to bring money in to close escrow if the Seller pulled cash out at any time and/or may require a promissory note.  If these become conditions of the approval, you can decide not to move forward with the closing.

We do not charge any fees up front and our fee is usually paid from agent commission or by the buyer.

We strongly advise our clients to consult an attorney BEFORE starting the short sale process.  A short sale may not be your best alternative, depending on your individual situation.  We appreciate our clients who seek good advice BEFORE starting this process.  It is a lot of work for all parties who are working on your behalf and to have you tell us you don't want to move forward after we get the approval(s) from your lender(s) because of information you could have gotten at the beginning is quite frustrating....and also a waste of your time and effort.

When you talk with any type of attorney, make sure to give them as much information about the loan(s) as possible, including what you got the loan for (purchase, refinance), if there was any cash out and what the cash was used for, etc.  The more information you can share with them, the more they can help you.

A written promise to repay a debt at a stated time in the future, usually in monthly installments and at a low interest rate.