Many homeowners dealing with a foreclosure still are not educated on what the qualifications for a short sale. A number of these homeowners think the process is too challenging, time consuming and much more, that they are not qualified. Contrary to these however, the requirements or qualifications are easy to meet and are generally the situations that put homeowners near a foreclosure in the first place. While this is meant to be a general guide to the requirements for most financial institutions, and it is important to note that requirements have become more flexible in recent times.

Tell me what is a Short Sale Please?

Before searching after what the qualifications for a short sale, a homeowner first should understand what a short sale is. A short sale is essentially one of the options available for homeowners wanting to avoid a foreclosure. The dynamics of the whole process lies on the ‘short’ of the sale that will be enforced on the property. Simply put, you’ll be selling your home for less than the mortgage amount in this strategy to avoid a foreclosure. But in order to sell your home ‘short’ of its mortgage, you should have good reasons to; you should be qualified. And these qualifications are usually set by lenders.

What are the qualifications for a short sale from a private lender?

Your current lender has the final decision in granting you a short sale. For you to be qualified for the program if your mortgage is under a private lender, here are the circumstances that must be met. Decreased home value is one of the strongest reasons a homeowner can use to make the lender agree to a short sale is a decrease in home value. Specifically, the decreased home value should be lower than the mortgage. Due to the fact that no lender would naturally agree to a short sale if the home can be sold more than the amount of the mortgage; home values are the determinants of price that prospect buyers will be willing to pay. Therefore, a homeowner should ask a real estate professional for a quote or comparative market analysis. If the outcome of the analysis is a home value larger than the mortgage, then the short sale is not necessary.

A destitute condition of the homeowner is another great reason for a lender to approve a short sale is a destitute circumstance or hardship that restrains the homeowner to meet monthly payments. This condition should be explained in a letter called the Letter of Hardship. A few of the acceptable hardship conditions include death of the homeowner or family member, illness of the homeowner or family member, bankruptcy, divorce, unemployment and decrease of income. Being miserable with neighbors or having made a bad purchase decision with the said property does not constitute a hardship.

No other assets to pay off the mortgage- It will be mandatory for the homeowner to submit proof that he or she has no other assets that can be used to pay for the payments in default and future payments. A statement of assets and liabilities supported by pay slips, income tax returns, non-cash investments and bank statements are typically enough supplement to the claim of no asset availability. To qualify for a short sale, total liabilities should be more than the net assets. Therefore, you should have a negative figure on the bottom of your statement of assets and liabilities. If not, a lender might point out other options in order for you to pay your mortgage.

What are the qualifications for a short sale under HAFA?

A short sale may likewise be backed by a government program called Home Affordable Foreclosure Alternatives or HAFA. It is under the bigger program called Making Home Affordable Program initiated by President Obama. As opposed to short sale alternative from a private lender, HAFA offers several benefits such as lenders receiving 6% on the loan balance or a maximum of $ 6,000 and sellers or homeowners receiving a relocation assistance of up to $ 3,000 which will be put on escrow until the sale is closed.

So what are the qualifications for a short sale under this program? They are:

● Homeowner need to be in a hardship situation

●The unpaid mortgage amount should be no more than $ 729,750 for a single unit; other limits are set for other types of homes

●Mortgage was taken before January 1, 2009

●The homeowner must be in default or is about to be in default of several monthly payments

● Property should be a personal residence; currently occupied by the homeowner

Separated from these requirements, a homeowner or seller must also be denied by the Home Affordable Modification Program or HAMP which covers loan modifications. Therefore, a homeowner should have first applied for a loan modification under the HAMP. Requirements for HAMP are the same with HAFA but with the addition of: mortgage payments should not exceed 31% of homeowner’s monthly income.

In addition, when applying for a short sale through HAFA, a homeowner has to check if his or her mortgage lender participates in the program. Otherwise, a short sale under the private lender is the only alternative available. When dealing with a foreclosure, a short sale is one of the best options that a homeowner should consider. It might be a lengthy process but it can be possible with the right assistance from a real estate professional and knowledge of the whole process. Nevertheless, seeking this option starts with being knowledgeable of the qualifications for a short sale. Contacting a Short Sale Realtor will better help you understand the qualifications of a short sale and how a Specialist can make the short sale process an easy transition.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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To both buyers and sellers, the steps to a short sale may appear unclear and convoluted. Buyers may be frustrated with the long short sale approval process, while sellers may find that their lack of knowledge surrounding real estate short sales stressful and concerning as they ponder the financial and legal consequences of the process.

While the short sale process may be tricky and full of potential complications, for a realtor experienced and familiar with the short sale process it will be fairly routine. An experienced short sale specialist can guide you through a successful short sale and lend advice, guidance and support along the way.

Real Estate Short Sale Process – Step By Step

Below are some of the steps you will go through with your short sale specialist in order to ensure a successful short sale and a fresh start for you and your family. While the specifics and documentation required may vary a bit from lender-to-lender or state-to-state, the general short sale process will be the same.

1. Find a Qualified Real Estate Short Sale Specialist

In the current market, there are many listing agents who – while they may be excellent realtors – simply do not have the experience to successfully execute a short sale. There are a lot of bumps and hairpin turns on the road to a successful short sale, and a lot of things can go wrong in the process. You’ll want an experienced short sale realtor who can help you navigate this tricky road.

Be sure that when you’re looking for a short sale Realtor, you inquire about their previous track record and experience with short sales. You’ll want an experienced short sale realtor that has successfully helped many homeowners through the short sale process, and who can achieve the same results for you.

2. Prepare a Short Sale Hardship Letter

In order to get your lender to release their lien on your home and permit a short sale, you’ll need to write a hardship letter explaining why you require a short sale. The more sympathetic and difficult your situation, the better your hardship letter will sound. Banks are also much more favorable towards homeowners who are in a financial bind due to external or personal circumstances such as unemployment, medical emergencies or illness, divorce, death, bankruptcy. Your short sale specialist may assist you with the specific content of your short sale hardship letter.

3. Prepare a Short Sale Package

There are three basic requirements that must be met for a bank or mortgage lender to grant a short sale: the seller must demonstrate hardship, the seller must prove that the fair market value of the home is less than that of the mortgage, and the seller must demonstrate that they are unable to meet their debt obligations. In order to prove the latter, the homeowner will need to prepare a short sale package for submission to their lender.

Each lender may have different submission requirements, but they are generally looking for proof that the homeowner is unable to honor their debt. It is important to seek the assistance of an experienced short sale realtor in preparing your short sale package, but the basic contents of your short sale package will likely consist of the following:

• Your hardship letter for short sale

• Letter of authorization – this document allows your lender to disclose information to and work with your short sale specialist, lawyers, or other 3rd parties involved in assisting you with your short sale. Your letter of authorization will include your loan reference number, your full name, the date, your agent/lawyer’s name as well as contact information.

• Completed financial statement

• 2 years of your annual tax return

• 2 years of your W-2s

• Your recent payroll stubs

• Recent bank statements

• List of recent comparable sales or comparative market analysis – In order to prove that your home will not sell for a sufficient amount to cover your mortgage, you will need to substantiate this fact with a comparative market analysis. Your real estate agent will prepare this for you.

4. Put Your Home on the Market

You’ll sign a listing agreement with your short sale realtor, though it will be subject to short sale approval from your lender. Your realtor will then put your home on the market and solicit buyer offers as they would with a regular listing.

5. Accept an Offer

You’ll accept an offer that is close to or at fair market value. The lender will not approve a short sale if the offer is significantly below market value.

6. Submit Buyer’s Preapproval Letter, Earnest Money Deposit, and Seller’s Short Sale Package to Lender for Short Sale Approval

Once you have accept the offer, your short sale realtor will submit the buyer’s preapproval letter, their earnest money check, as well as the short sale package you and your realtor have prepared to the lender. At this stage, most lenders have an internal process for managing short sale approvals, and a loss mitigator will be assigned to your file. It may take anywhere from a few weeks to many months for your short sale to be approved or rejected.

This is another part of the process where it’s important to have a short sale specialist working for you. An experienced short sale realtor who has experience in short sale negotiations is significantly more likely to get your short sale approved and obtain forgiveness for the deficiency. An experienced short sale negotiator is also more likely to obtain short sale approval faster by consistently following up with your lender and pushing the process forward.

7. Receive Short Sale Approval

If your short sale is approved, the bank will issue a short sale approval letter. By this point, you may have been waiting a few weeks, or perhaps even half a year for short sale approval. The length of the short sale approval process will depend primarily on the lender, though in some cases your short sale negotiator may delay or speed up the process.

8. Deal closes & Lender Releases Lien

The buyer will deliver the funds, the seller will deliver the deed, and the lender will release their lien on the property. Depending on the short sale agreement negotiated by your short sale negotiator/short sale realtor, you may now be free of your debt obligation. Alternatively, it is possible that you didn’t qualify for debt forgiveness and you will still be personally liable for the deficiency between the proceeds of sale and your initial debt.

While it is not always possible to obtain forgiveness of the deficiency in every short sale, this is yet another reason you’ll want to work with a short sale specialist rather than just any listing agent. A realtor with experience in short sale negotiations ensures that you have the best chance possible of obtaining full forgiveness of your debt. Experienced short sale realtors have plenty of experience working with loss mitigations in negotiating forgiveness of short sale deficiencies and can do the same for you. With the right expertise and handling, your short sale might just be your ticket to a fresh start, so be sure it’s in the right hands.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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Various homeowners have been facing ugly foreclosures ever since the real estate meltdown. Generally, a foreclosure means the possibility of losing one’s home, and one of the things in this sad truth is the ongoing economic slump in Jupiter that has resulted in massive unemployment rates. In addition to this is the rise in the mortgage loan payments or an increase in expenses due to unexpected costs and expenditures.

For those who are going to deal with the certainty of a foreclosure, their fundamental concern is how to refrain from this ugly circumstance. And for them, help in any way is the best solution to their financial situation.

Below are the five ways to avoid a foreclosure, which any homeowner can choose so that they don’t lose their home completely without something in return.

Mortgage Relief

The first option to avoiding a foreclosure is a mortgage relief. If the homeowner is positive that he can’t pay the mortgage on time, this should be carried on to the lender for quick solution. For instance, the lender may agree to expand the period of time that they would normally foreclose a home. Typically, lenders provide homeowners in Jupiter, FL three months before they would foreclose a home yet by talking to the lender, a homeowner may be given a mortgage relief and thus, extend the time frame before the house is foreclosed; perhaps more than the usual three months.

The drawback to this option in avoiding a foreclosure is that the homeowner is merely delaying the foreclosure of his house. If their financial situation is the same throughout the extension the lender gives them, the certainty of losing their house to a foreclosure will eventually come to pass.

Loan Modification

Following in the five ways to avoid a foreclosure is loan modification. Even though the main goal of this option is to modify the loan so that the unpaid amortizations are cleared off and merge them with the principal, a homeowner in Jupiter may ask for a change in terms of his mortgage, rate type (from fixed to adjustable or vice versa), and interest rate as well.

Nevertheless, this option may only be available for homeowners who have good credit score, steady income, and only one to three months late with their payments. If these requirements are met, one can just call his bank (current mortgage holder) and ask for a loan modification.

The only setback to this method in avoiding foreclosure is the usual homeowners’ inability of juggling different types of credits and debts; a situation where most homeowners facing foreclosure are in.

Refinance

Another way to avoid foreclosure is going through the traditional refinance method. Usually this option is for homeowners in Jupiter who would like to take advantage of lower market rates and who are updated with their monthly amortization. Yet, many lenders are now accepting refinancing for homes facing a foreclosure, provided that the homeowner meets several requirements.

A worried homeowner can make the most of a refinance by going to another or different lender. This new lender will then be the one who will bear the existing home loan and change it into another/new home loan. In conclusion, the homeowner will carry a new loan with different terms and one where the monthly amortizations are just about to begin.

One of the benefits to this alternative in avoiding a foreclosure is that the homeowner can take advantage of a lower interest rate if current market rates are low. Moreover, this may also grant the owner the chance for term adjustment; an originally shorter term loan of 15 years can be changed into a long term loan of 30 years.

Usually, the requirement that a homeowner should meet in order to utilize a refinancing is a substantial equity on the property.

Forbearance

If the ugly truth of a foreclosure is ahead, one of the five ways to avoid a foreclosure is by searching for forbearance from the lender. In forbearance, the lender will be able to stop or reduce the amount of payments that comes due every month so the homeowner can bring his financial health back.

The advantage of this option in avoiding a foreclosure is that during the time the forbearance is in effect, the homeowner can use his money to clear off other bills or debts. This will also provide the homeowner the chance to pursue a better high-paying job so he can resume paying the mortgage.

In a cursory look, it appears to be that the homeowner is free from paying his mortgage; forbearance does not flow like this. The homeowner may be free from paying his loan for some time but he still is responsible for paying the unpaid amortizations plus interest as soon as the forbearance is over.

Short Sale

When all options to avoid a foreclosure have been considered and given thought and yet, a foreclosure is still sure to happen, the last resort and option for the homeowner to do is to go for the short sale option. In this alternative, the bank in Jupiter or lender will rather allow you to sell your house for less than what you owe them as rather than dealing with foreclosure procedures themselves. The distinction between the selling price and the loan amount is the reason why it is named “short” sale.

In the government-sponsored short-sale alternative under Home Affordable Foreclosure Alternatives, homeowners are subsidized up to $ 3,000 for relocation by the government. However, you must meet the requirements set by HAFA to apply for this subsidy.

In conclusion, these are the five methods to avoiding a foreclosure. Every choice presented here has its own ups and downs. And the best way to sort these out and choose the best option is for the homeowner to consider his situation/overall financial standing and see which of these five ways to avoiding foreclosure meets his needs most.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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Getting fired from your job usually means getting cut from the main source of income, and one of the first things to be sidelined when this occurs are mortgage payments. Paying for a house to live in might appear to be a little costly especially if you can just opt to rent an apartment. While it is easier to just walk away from your monthly mortgage payments and let the bank take your home, you might want to contemplate a short sale. So, what is the difference in the benefits of a short sale VS a foreclosure?

Benefits of a Foreclosure – the art of walking away

Foreclosure is the easy way out. Basically, foreclosure is simply walking away from your property until the bank decides to foreclose on it. This is a little known fact, but foreclosure could possibly be the worst thing that you can do. Think it over – after the bank forces you to turn over your property, they get to clean it up, put it on sale for a cheaper price and whoever gets the property will either: (a) renovate it and try to sell it at a very high premium; (b) sell it as is and the seller can still get a respectable profit out of it or; (c) whomever gets the property can just live in it, still getting the better end of the deal because of the bargain price that he or she bought it for.

Foreclosed properties can sell pretty quickly as compared to a short sale. While this sounds pretty good on paper, keep in mind that it is the bank that already owns the foreclosed property, they are the ones who profit the most from a fast transaction, so please, take this time to read further into avoiding or preventing foreclosure.

Also, while it may sound really easy to just walk away from your property and let the bank acquire it, you may want to consider the following repercussions:

• It shows up on your credit records – taking care of your credit rating and record should by far be more critical than anything else you should consider before taking the easy way out. It is noted that your credit rating can go to as low as 160 to 105 points depending on the manner of foreclosure or on your credit history. This is especially important to consider if you have an active business or you are looking into bank loans for business or other concerns. A foreclosure can sometimes be read as a severe negligence on the part of the person. It is crucial to note that banks do not consider any kind of personal issues that you are enduring at the time of foreclosure: it’s either you make your payments on time or you don’t.

• A foreclosure record can leave a lasting impression – records of a previously foreclosed property may show up on your personal credit for up to 7 years. That is a lot of time to consider especially if you want to apply for something that is bank or credit related in the next seven years. While most people will think that they wouldn’t mind this kind of record because they are not planning on doing anything bank related, consider this: any type of foreclosed property records can severely affect your job applications. Why? Some employers look into your credit background to see if you are responsible in your credit, and a foreclosure blemish may cause them to conclude that you are irresponsible if you have a foreclosure on your record.

• Waiting period before you can buy – records of foreclosure can affect even the period when you can purchase your next home. Typically, banks choose more responsible and trustworthy people without any form of negative records to approve a home loan application. The current waiting timeframe for anybody to be granted by a bank or an institution to mortgage a home again is usually 5 years. Also, do you think a bank will let you purchase a home if records show that you already failed in maintaining a previous mortgage?

• It affects your loan applications – similar to most of the reasons above: why would you think any bank will permit a loan to you if your records reveal that you had trouble paying for one before? Even if the intention might be very different from that of a home purchase, like a school loan, car loan or business loan, it is still the same thing.

• You get evicted immediately – unlike if you put your home up for a short sale; eviction usually is very quick if your property is being foreclosed on. Generally, a notice period of 30 days is given to the person with a foreclosed property, but any other extensions might not be considered by the lending institution.

Benefits of a Short-sale – doing something about it

A short sale home specialist defines a short-sale as the lesser of the two evils. If you are concerned on how to Short Sale a home, then the first thing you need to be aware of is it allows you a lot of options that foreclosure doesn’t give you, such as:

• Control over the price – in opposition to foreclosures, short-sales allow you to control the price of the sale because you still altogether own your home as the bank has not seized ownership of it yet. Granted, short-sale prices are still a lot lower at market value than the property value, you’d much rather be selling at a loss than letting the bank do all the selling for you. Even though the bank must have the final say so in a short sale offer, prices typically are higher than foreclosed homes. This will do your neighbors a favor by helping to preserve community property values.

• Leave when you want to leave – opting a short sale lets you stay in your home longer, as the bank will give you notice when the short sale deal is approved for close. A short sale waiting period can last from up to 2 to 3 months.

• A clean slate – while generally your personal credit and bank records are your own responsibility, a short sale does not impact your credit in the same way as a foreclosure. That means you can do a lot of things that you wouldn’t be capable of if you had a foreclosure showing up on your credit. Not only to mention a clean slate, but on top of this and upon a successful completion of your short sale you may qualify for the HAFA Program. A program that could offer up to $ 3,000.00 CASH BACK towards your relocation! A borrower can be eligible to purchase a property in only two years after a foreclosure.

So, which is the better option? A short sale or a foreclosure?

Considering a short sale over foreclosure may be the best option by far. The mere fact that you have control over the price and the time when you can sell your home is a better alternative than being forced to give up your house and being ordered to leave the premises as soon as possible.

While it is ultimately up to the person to select either a short sale or a foreclosure, what is valuable is that options are weighed first and consider how it may affect your ability to buy a home in the future and affect your credit rating. Doing your research is a job well done. Now, your next step is to contact one of our extremely trained Short Sale Specialists, so they can get your short sale on the go and successfully completed!

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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Let’s be honest, some short sale sellers are finding it challenging to sell a home as a short sale. Short sales can be a long complicating process if you lack the right professional and not handled carefully. Short sales that are cared for by inexperienced Realtors can typically end up as foreclosures, which is an even more devastating moment for the homeowner who has already gone through a hardship and hoped a short sale could be their answer.

The short sale process can be an easy transition as long as the homeowner is fully up to speed with the process and has an experienced, knowledgeable, and skillful short sale specialist with them. Homeowners should also know that short sale services should always be free!

One of the most common short sale mistakes is the pricing of the home. At times the price is too high, too low, or just right. When it comes to pricing the home for a short sale, certain parties need to agree with it like the lender, the buyer, the buyer’s agent, the seller, and the seller’s lender. It probably seems like a lot of people to impress, but the truth is that it is achievable and it does occur.

A critical short sale selling mistake is having an unorganized short sale package. This package will contain proof of the homeowner’s financial hardship and give the lender an idea of how long the hardship has been going on and what the homeowner has done to try to escape the situation.

Another short sale mistake is settling with an inexperienced listing agent for the short sale home. It is highly important as a homeowner who has opted for a short sale to find an experienced and knowledgeable short sale specialist. These agents specialize in short sales and know the process very well. When seeking out the right short sale Realtor, it is important to obtain validity of their short sale completions and how long they have been in business. Do not be afraid to allow your short sale specialist search be lengthy.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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