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In simplified terms, “short sale” refers to a mortgage lender agreeing to sell a property for less than what the borrower owes. Short sales are an alternative to foreclosure, a lengthy and an expensive means to an end for both the lender and the borrower.

The short sale process is not a simple one, and often tales of wayward experiences make their way into discussions, but don’t let those stories be your guidepost.

Freddie Mac, the largest buyer of mortgages in the U.S., created Standard Short Sale, and Obtain Valuation functions to help mortgage lenders and companies that service (take and post payments amongst other duties) home loans make short sale decisions in a shorter time frame.

Even with these automated applications, the paperwork involved in short sales is enormous. Completing the required forms, submitting them for review, then tasking someone to examine the documents equals a drawn out timeline for approval.

What Type of Property Is Eligible for Short Sale?

Primary or secondary residences and investment properties are suitable for short sale. Freddie Mac requires borrowers who are less than 30 days delinquent occupy the short sale property as their primary residence.

As a Short Sale and Foreclosure Resource (SFR) professional in San Diego, I can answer questions related to qualifications and lender requirements.

Who Qualifies for a Short Sale?

A borrower can qualify for mortgage assistance or a short sale if they are suffering financial hardship. Examples include job loss, severe illness or medical bills, divorce, and the loss of home equity.

In most cases, loss of home equity is the result of drastic real estate market fluctuations and home prices; otherwise known as being “underwater” or in a negative equity position. Home buyers who bought property when prices were at their peak, right before the market crash in 2008, could be “underwater.”

Before electing the short sale solution, contact your lender to discuss your options. Many banks and mortgage servicing companies have programs in place to assist customers who fall on difficult financial times. They would rather provide relief than take a loss in a loan default.

You can also qualify for a short sale if your employer transfers you to another state/city.

When Does the Short Sale Process Begin?

The best time to initiate short sale proceedings is as soon as you face delinquency or receive notice of a transfer. Contact your lender to inform them of your hardship or job change and follow their advice.

After discussing options with your lender, and you feel a short sale is the best solution, contact me to help assemble the application packet.

Freddie Mac requires listing the property with a licensed real estate broker and an active listing status on the local MLS service for five consecutive days, including a weekend. I provide this service to all my clients, including short sales.

Need More Information?

Short sales are still complicated transactions, despite streamlining efforts. Contact me to map out the best strategy for your situation.