If you are behind on your mortgage payments and you want to avoid foreclosure, one of the options you are likely considering is a short sale. For many homeowners, a short sale is one of the best ways to prevent foreclosure while avoiding added costs associated with a deficiency judgment. While it is not always possible to have the remaining debt forgiven by the lender, short sales allow many homeowners to avoid taking the serious credit hit associated with a foreclosure, which often means that they can be eligible to buy a home again on a much shorter timeline. When you are considering a short sale, you might know a little bit about the process but may be unclear about specific steps. While it will be important to work with an Oak Park foreclosure defense attorney on the specific facts of your case, the following are the general steps in a short sale.
1. Determine if You Have Other Options for Catching Up on Your Mortgage
Since a short sale will mean that you sell your house and move to another location, you will want to consider whether you have other options that might allow you to catch up on your mortgage. For debtors who are significantly behind on mortgage payments, another option may be to file for Chapter 13 bankruptcy if you are eligible.
2. Make a Plan for Approaching Your Lender
You will need to receive approval from your lender to make a short sale since a short sale will involve selling the property for less money than you owe on it. Convincing your lender to agree to the short sale is often necessary. It will be important to show the lender that the short sale is necessary and to show, if possible, that unexpected circumstances resulted in your inability to make your mortgage payments. You will want to gather financial materials that provide evidence of your financial situation and the need for the short sale.
3. Ask the Lender for Approval
Next, you will need to request approval from the lender for a short sale. As an article in Quicken Loans explains, you will need to make this request through the proper channels. For most short sales, you will need to speak with someone in the loss mitigation department. At this stage, it is beneficial to have an experienced lawyer on your side who can deal with the lender on your behalf and can seek approval for the short sale.
4. Create a Short Sale Proposal and Set the Price
If the lender approves the short sale, you will need to create a short sale proposal and set the price. Ideally, you will sell the house for a price that is close to what you owe on the mortgage (or as close as possible to what you owe on the mortgage). The bank may be more willing to forgive a smaller amount of money rather than seeking a deficiency judgment.
5. Find a Buyer for Your Home
You will have to find a buyer with your short sale proposal. When you receive an offer from a buyer, you will need to obtain a purchase agreement to submit to your lender with your proposal.
6. Submit Your Proposal to Your Lender
Finally, you will submit your proposal, the purchase agreement, and all supporting financial materials to your lender. Your lender will need to approve the short sale and accept the offer from the buyer.
Contact an Oak Park Foreclosure Defense Attorney
If you have short sale questions, our Oak Park foreclosure defense attorneys can help. Contact the Emerson Law Firm today for assistance.
See Related Blog Posts:
Foreclosure Filings Increase by More Than 15%
Top Five Advantages of a Short Sale