What are the Steps in a Short Sale?

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.




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Five Things to Know About Short Sales

If you are facing foreclosure due to the inability to make mortgage payments, it is important to consider ways of avoiding foreclosure—even if you cannot remain in your home. While a number of foreclosure avoidance options may not allow a struggling homeowner to keep the house, they can prevent a damaging foreclosure sale and everything it means for the debtor’s credit. Short sales are one option to avoid foreclosure in Oak Park and throughout Illinois. If you have never considered foreclosure prevention options in the past, the prospect of a short sale can be confusing. However, our experienced Oak Park foreclosure defense lawyers are here to assist you. The following are five things to know about short sales.

Short Sales are One Option to Avoid Foreclosure

As we mentioned above, short sales are one option to avoid foreclosure. Other options may include, for example, a deed-in-lieu of foreclosure or even a Chapter 13 bankruptcy filing if you are eligible. Unlike a short sale and a deed-in-lieu, a Chapter 13 bankruptcy can allow you to remain in your home and to get back on track with mortgage payments. When Chapter 13 is not an option, a short sale or deed-in-lieu can allow you to avoid dealing with the more severe consequences of a foreclosure.

Short Sales Can Still Damage Your Credit, But to a Lesser Extent Than Foreclosure

You should know that a short sale will still result in some damage to your credit. However, its effects will be much less significant than a foreclosure.

You Will Need Lender Approval to Do a Short Sale

You cannot simply decide to do a short sale on your own and move forward with the process. Instead, you will need to seek approval from the lender, and it will be critical to ensure that the lender agrees to forgive any remaining debt after the sale goes through.

Short Sales Can Take Some Time

Since short sales are complex, you should not expect that they will necessarily be quick. While short sales can happen relatively quickly, they can take many months.

Short Sales Tend to Fall Through More Often Than Traditional House Sales

If you are trying to sell your home through a short sale, it is essential to keep in mind that these are complex transactions and that there are often more routes for the lender or the buyer to back out, according to Bankrate. As such, while short sales are frequently strong foreclosure avoidance options for struggling homeowners, it is important to know that short sales do fall through with some frequency.

Contact Our Oak Park Foreclosure Defense Lawyers

Do you have questions about avoiding foreclosure or about short sales more specifically? One of our experienced Oak Park foreclosure defense attorneys can speak with you today about your options. We routinely assist homeowners with a variety of foreclosure defense strategies, including short sales, deed-in-lieu of foreclosure, and Chapter 13 bankruptcy. Contact the Emerson Law Firm today for more information about how we can assist you.



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I’ve Got Multiple Mortgages, Can I Still Short Sell?

The Oak Park and River Forest short sale lawyer at our firm often fields questions from clients trying to get help with mortgage problems.  We often explain that a “short sale” is a helpful tool whereby those struggling to pay a mortgage can deal with the problem without the need to go through the entire foreclosure process. In fact, a short sale is possible even when one has two (or three!) mortgages on a single home.  It is not easy and can get complicated, but a competent legal professional in the area can help you get it done.

Short Selling with Multiple Lenders

A short sale involves a homeowner working out an agreement with a bank to sell the home to a third-party for less than the total debt due on the home.  Many local residents were severely hurt in the recent recession—through no fault of their own—and found their house value plummet.  The short sale then, is an important way to escape from underwater homes.  When multiple lenders have a lien on the property, however, each lender must sign off on the short sale.  For example, if you took out a second mortgage on your home, both lenders would have to consent to the short sale before it could go through.

Some local resident might worry that getting two lenders to agree might pose a complication.  Of course, it is always a possibility that one of the lenders might hold up the process or put an end to it entirely.  Yet, our Cook County short sale attorneys understand that in some situations lenders are growing more eager to approve short sales.  Getting multiple lien holders to agree on a sale is not an insurmountable barrier.

For one thing, junior lien holders may have clear incentives to approve a short sale.  The junior lien holder is usually the second (or third) lender.  These lien holders often have little to gain via a foreclosure.  In a foreclosure, whoever holds the first mortgage gets first priority.  There is rarely any money left over for junior lien holders, and they may end up with nothing.  A short sale may prevent this

Last week news broke regarding changes in policy that will likely make short sales move along more quickly.  Federal regulations now require Fannie Mae and Freddie Mac to give short sale buyers a decision within two months.  This represents a big improvement and will make the short sale process more feasible for many local residents—including those who have multiple mortgages.

Dealing with foreclosure, the threat of foreclosure, or an underwater home can be a stressful, lonely time.  But resident should never forget that legal options exist to help them out of the situation.  The first step for those in our area is visiting with a local Cook County real estate lawyer to learn what is available in your case.  There is nothing to lose from learning more from legal professionals who have experience navigating all of these short sale and foreclosure complexities. 

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