A short sale, aka pre-foreclosure sale, takes place when a seller is already behind on payments, or has let the lender know they are at risk of falling behind and there is a gap between the property value and loan balance. The lender approves a sale even though the property will sell for a price less than what is owed on the mortgage. 

Pre-foreclosure sale might be an option when:

• A home is worth less than is owed on the mortgage
• The owner/potential seller has a demonstrated financial hardship
• The potential seller submits all required verification and short sale    documentation to their lender within the appropriate time frames
• Junior lien holders are willing to accept little or zero proceeds from the sale of the property

Pre-foreclosure sale might NOT be an option when:

• Seller has the ability to pay or refinance
• Seller has filed for bankruptcy protection
• Seller is not willing to participate

Seller options other than short sale/pre-foreclosure or foreclosure:

• Modification
• Forbearance
• Bankruptcy
• Refinance
• Deed in lieu

Information lender may require (varies per lender):

• Completed financial statement showing assets, liabilities and income
• Hardship explanation
• Tax returns, 1099's, W-2's
• Self employed, Profit and Loss statement for business
• Pay stubs
• Bank statements for at least 3 months sometimes 6
• Any other documentation or information that may be relevant

Potential pitfalls:

• Lender still requires borrower to make payments
• Meeting all of the lender?s deadlines is important
• Can take 120 to 180 days 
• Sometimes buyers are not eager to get involved

Short Sale

Foreclosure

Homeowner can qualify for Fannie Mae loan after 2 years Do not have declare that you have foreclosure on your record Short sale not reported on credit history will show as paid or negotiated Credit score may only lose as little as 50 points. Does not challenge most security clearances. Typically not a barrier to  employment Most times lender will not pursue deficiency judgment or lower deficiency judgment

Homeowners ineligible for Fannie Mae loan for 5 years, investor 7 years Must check yes to having a property foreclosed on for any future application for a mortgage Credit score can be lowered 250 to over 300 points Foreclosure will remain on public record for 10 years Can challenge security clearance Employment can be terminated due to foreclosure, deficiency judgment.

If you are undecided in what to do, call me, Debbie "Action" Jackson-Majko, for a free consultation.  Short sales are complex.  They can be stressful and challenging for a homeowner to do on their own, so much so that some lenders require a seller?s agent.

Let me help you. I specialize in selling short sale properties. Remember, there is no cost to you to hire an agent to manage the short sale of your home.  Commission is paid to the agent by the lender.