Short Sale Definition: Selling a house for less than is owed on the mortgage or combined mortgages with the Bank’s Approval.

Here you will find a wide variety of useful information and resources designed to help you understand the process and options.

1. Understand loan modifications HAMP: If you are barely underwater on your home, this route may work, if you are 20% or more upside down, go directly to a short sale. Chances are it will take YEARS to break even on your home. Banks are NOT willing to do “principal reductions” (principal is the amount you owe). However, they may be willing to reduce or defer your interest rate in order to get a lower payment. BE CAREFUL: think smart about your financial future when modifying a loan on a home that is worth considerably less than you owe. UPDATE: The U.S. Department of Housing and Urban Development (HUD) indicates that 3,530,000 applications have been submitted for loan modifications as of September 2010, and 495,900 14.05% have received permanent loan modifications. At nine months, nearly 90% of homeowners remain in a permanent modification, with 11% defaulted. Fewer than 16% of permanent modifications are 60+ days delinquent. Like with most government programs it is a long, tedious, time consuming process that yields poor results.

2. Short Sale: When a loan modification will not work, or you just need to get out of the house all together, do a short sale. The short sale process takes about three to six months. You will need a very good CERTIFIED SHORT SALE AGENT who has the specialized knowledge and processes needed to complete short sales. (Our team includes very experienced and dedicated staff and a local MINNESOTA SHORT SALE attorney’s office that negotiates with the bank on your behalf).

3. Deed in Lieu of Foreclosure: If you just can’t sell the house or condo, offer to deed the house back to the bank. This is your last, best bet before a Foreclosure. In order to deed the house back to the bank there can be no second mortgages or other liens on the property. The bank may not want it and instead will want you to continue trying to Short Sale. Typically the bank will want you to have listed the property with a CERTIFIED SHORT SALE AGENT for at least 90 days on the local Multiple Listing Service (MLS). Several customers who have attempted to deed back to the bank and the bank just responded with “Lower the price another $10,000 and call us back in 60 days”. We did, and the bank gave us the same response again 60 days later. The bank does not want your property and would rather you participate in a MINNESOTA SHORT SALE. A deed in lieu of foreclosure will hit your credit harder than a Foreclosure.

4. Foreclosure: At some point, not making your house payments and / or not getting a purchase agreement on the home, the bank will probably decide to move forward with their right to take the home back through a foreclosure. If you are “served” papers, you still have time to sell the home. If you list your property with a Certified Short Sale Agent and find a buyer, most lenders will automatically postpone the foreclosure sale. However, you should not walk away or wait any longer to get the home on the market. The quicker we can get involved and get the home under contract with a new buyer, the faster we can stall a foreclosure by completing a fast MINNESOTA SHORT SALE.

Banks are not willing to take a loss on their investment unless you qualify for a MINNESOTA SHORT SALE.

Qualifications for a MINNESOTA SHORT SALE

1. The market value of the property has dropped: The home is worth less than the unpaid balance of the mortgage. The only way to know this is to look at the recent closed transactions of properties around your home. Recent is within the last 3-6 months. A true value is determined by what someone else is willing to pay for the home, however a MINNESOTA Short Sale Real Estate Agent or appraiser can give you a good determination of value.

2. In-default or near default: Lenders are all over the board on this one. Some require you to be late on payments, some do not care, and some will tell you something different every day that you call. The bottom line, if you can’t pay, you can’t pay. If you can pay and it’s very tight, it’s your own personal decision to keep paying or to stop paying the mortgage. Ask our MINNESOTA SHORT SALE attorney her legal opinion on this issue.

3. Seller has no significant assets: Rarely will a bank allow a short sale and take a loss on the investment if you have a load of cash sitting in the bank. Clarification: If you have a million in retirement funds, do not to worry, but if you have $50k+ sitting in the bank? They could ask for some of that cash to cover the difference. What if you have $5k in the bank? $5k is living expenses, just in case money, emergency money – banks will be much more likely to hear your hardship situation and not ask for any of that money.

4. Seller hardship: The Seller must have a current or imminent hardship. The banks want this in a writing, in the form of a letter, and you need to be legitimate and truthful.

Examples of a Hardship:

The following is a nonexclusive list of hardships that a Lender or Lien holder may take into account when deciding whether to accept a short sale: