Tips To Keep You Sane During the Short Sale Process

It’s no news that the short sale process can be a long process. Many buyers at this time get tired of waiting and would threaten to cancel if they do not get answers within a specified time. This doesn’t help matters and doesn’t help make the process simpler or faster.

Following is a standard short sale process with the bank:

  • Bank acknowledges receipt of your file. This can take 10 days up to a month.
  • A negotiator is assigned. This can take a week to thirty days.
  • A BPO is ordered. The bank probably will refuse to share the BPO results.
  • A second negotiator can be assigned. This can take another four week period.
  • The file is usually sent for review or to the PSA. This can take 2 weeks to 30 days.
  • The bank will then request that all parties sign an Arm’s-Length Affidavit.
  • The bank issues a short sale approval letter.

Buyers get mad and annoyed because the short sale process is generally so lengthy they will sometimes cancel without telling anyone, much less the vendor. Some short sales get approval in 2 to 8 weeks while others can take 90 to 120 days, on average

Banks are losing cash in a short sale and aren’t really enthusiastic about it. It’s justifiable. Envision that you advanced a companion $100, and he came to you later saying he could just pay you back $75. Would you cave in easily? Most likely not.

In fact, everybody knows that it can and virtually certainly will take orders of magnitude longer than the average 30 to 60 days until you sign on the dotted line and the nightmare ends. And yet, that is exactly what the buyer will put in the contract – a deadline of 30 to 60 days.

Your bank, of course, will completely ignore this date, they do not care if you want to keep a buyer. The ball is in their court, and they get to call the shots. They will whenever they are ready – they are busy with other people just like you – and not any moment sooner.

It’s important to understand that a buyer and their agent haven’t any control over the procedure. The success of a short sale — and how long the short sale takes — relies intensely on the listing agent. If the listing agent isn’t familiar with short sales, you’re very likely wasting your time. An excellent short sales listing agent will effectively advise the homeowner and have an intensive knowledge of the lender and their particular processes.

During this time, it is rather likely you are feeling bored or unhappy looking forward to the short sale approval. It’s normal to experience a wide range of emotions during the process, from elation (finding the right house or opportunity) to frustration (when in God’s name am I going to get a short sale approval) to dejection (probably not meant to be). But no matter how justified your feelings, you aren’t doing yourself any favors when you let them get the best of you. This isn’t to suggest that you would think of sobbing on the phone to your agent, but don’t underestimate how even subtle exhibits of emotions like frustration or impatience can shine through during your communications with agents and lenders. Here are some tips to keep lucid during the short sale process:

  1. Don’t put your life on hold.

Don’t lose sight of the personal goals during the waiting process. Don’t stop authoring, blogging, reading, working out, eating healthy, studying, making music, painting or any program you already take part in! Sticking with your goals will help make the wait much more worth it.

  1. Stay positive.

Find a way to stay positive during this period, while talking to your agent, lender or buyer. This makes them more enthusiastic about the process too. Positivity is contagious. A good way to stay positive is to keep yourself busy, make improvements in other areas of your life.

  1. Do not hound your broker or home loan expert … as much as you want.

Keep your phone out of sight when you should be focused. Chances are the lender won’t come to a decision early on. If you don’t understand something linked to the process, call your agent or mortgage banker certainly, but don’t keep contacting for a decision on the short sale from your own real estate agent. Whether you become close friends after expending hours on the telephone or not- your agent can not work for the lender, and really you’re simply using up your daytime minutes.

When awaiting the short sale approval, it’s important that you focus on other things than just waiting on short sale approval. Focus on what life will be like after the short sale is complete. Sellers should focus on finding a place to live after the short sale is done, saving money and getting their finances in order.

Unfortunately, waiting is a part of the short sale process. Do not let it stress you out or make you think your short sale will be denied. It is not unusual for months to pass by without a solid solution. In the meantime, you will submit paperwork and resubmit several times. Do not let this part of the process put you down, it’s just part of the short sale experience.

Here are some things to keep you busy while waiting for short sale approval:

  • Become a Guitar God in 90 days – Easy and free guitar lessons.
  • Take the 365 challenge. Make something every day and “kick start your creativity.”
  • Working out.
  • Write a novel.
  • Meditate, daydream, lying in the grass and watch the clouds
  • Write a book
  • Make 60 paintings in 60 days
  • Gain 20 pounds of muscle in 60 days
  • Go from Couch to 5K in 60 days
  • Take and pass the GMAT
  • Learn a language
  • Practice Yoga everyday
  • Sign up for cooking classes
  • Try 30 rolls of sandwiches

During this time; the point is; make every effort to improve yourself. Become better at your job, you can work out to become better physically, this will yield better returns for you after the long 90 days of the short sale approval process.

3 Common Problems Short Sale Sellers Face (And How To Avoid Them)

As foreclosures in the U.S keep on being commonplace all through these tough economic periods, several homeowners who are getting overwhelmed by their mortgage payments are looking at pursuing a short sale as an alternative to foreclosure.

A short sale must be approved by the mortgage lender, and not just every short sale applicant will qualify. In other words, while a short sale is a preferable alternative to a foreclosure, it is still a time-consuming, complex process. Sellers considering whether or not to attempt short selling their property need to know the processes and the various issues they may face while going for the short sale option.

What Does a Seller Need To Pursue a Short Sale

If the choice has been made to pursue a short sale, the first steps are to get in touch with a real estate agent knowledgeable in handling short sales in your area and also notify your lender that you will be attempting to short sell the home. But just because you decide to pursue a short sale does not ensure you’ll automatically meet the requirements from the lender. Among some other paperwork, lenders might request the following to determine if they will deem consenting to a short sale of the property:

Letter of Authorization: Contains the home address, name, date, your agent’s name and contact info as well as the loan reference number

Hardship Letter: Describes the need of the homeowner for a short sale (i.e., unemployment, hospitalization, divorce, bankruptcy, etc.)

Proof of Income & Assets: Including any savings, money market accounts, stocks or bonds, or cash and other real estate

Copies of Bank Statements: You will have to show all deposit and withdrawals done over a period of time

Preliminary Net Sheet: An estimated closing statement that displays the predicted sale price, together with all the costs of the sale, unpaid loan balances and outstanding payments due

Comparative Market Analysis: Shows the prices of similar homes sold in that area

Tax Returns: As much as two years of tax returns

 Problems Short Sale Sellers Face & Their Solutions

  1. Seller Without Hardship

The most common short sale problem is when the seller has no hardship. Most sellers realize that a short sale implies the house is under water. You can’t do a short sale on a home that will auction for enough to pony up all required funds and pay the majority of the cost of selling. When there is insufficient value on a property to pay the sum due the bank, the home short sells.

Simply being short to the bank is not really reason enough to do a short sale transaction, in most cases. Generally, the bank expects for a hardship letter from the seller describing:

  • The seller’s trouble
  • What the seller did to fix the problem
  • Why nothing seems to work

If the sellers’ situation is the same as it was on the day the seller took out the mortgage, the lender may be very unlikely to grant the short sale. Many banks insist upon a seller hardship. No hardship is a short sale problem that might lead to short sale rejection.

A solution to the short sale problem is either to try again after a hardship occurs or offer to partake in the bank’s loss by making a seller contribution.

  1. Issue of multiple loans

Some smaller banks have a notoriety for being difficult. Commonly, those banks can go one of two ways. Either the bank will dismiss the short sale or the bank will endorse it, it’s either black or white and your chances are around 50/50 with these banks.

This does not imply that whenever you have a short sale with two loans that the second lender will cause problems, but this is not the case. The reason for the problem with the second lender is often the amount of payoff. The first lender may not want to pay out the second lender in excess of, say, $3,000.

If the home goes to foreclosure, fairly probably the mortgage with the second lender may well get wiped out. But it doesn’t mean the second has no recourse, or that the bank isn’t compensated by the PSA or stand to receive substantial bail-out cash from the federal government.

A solution to the problem is to put pressure on the second lender to accept the short sale or the first lender to contribute more. The first lender might back down and agree to pay more.

  1. No Release of Personal Liability

Apart from eschewing the stigma and pitfalls of foreclosure, many sellers do short sales because they believe they’ll get a release of personal liability. Borrowers deserve to be relinquished from the mortgage, to know the lender will not pursue them for the deficiency after the transaction closes.

Granting the short sale and releasing a seller from personal liability are two different things. A bank can accede to do a short sale and still reserve the right to pursue the seller for the amount unpaid. Generally, if a short sale letter does not categorically address the issue, the seller is not relinquished.

The solution is to insist on being relinquished. The bank will tell you it cannot change the verbiage, but it’s the negotiator who chooses not to be bothered. Banks can and do change the clause. Insist on it. If your agent can’t get it for you, hire a short sale lawyer to obtain the release of liability.

Foreclosure vs. Short Sale

There exists a lot of misunderstandings about foreclosures and short sales. Which should you use and why? Will your credit score be impacted just the same way by both of them?

When you buy a house, you typically make a deposit and then set up a mortgage amortized over a number of years. The house is used as collateral and if the homeowner is unable to make monthly mortgage payments, the credit institution has the right to seize the property in order to recoup their losses.

Now let’s compare these two options:

What is a Foreclosure?

Foreclosure is the means by which a lender gets title to a property because of homeowner’s loan default. The lender recoups their own loan investment by simply selling it at the trustee sale. If there are usually no other potential buyers, the bank takes the exact property into inventory as real estate owned (REO). Banks are not in the business of property proprietorship nor management, and they are legally obligated to sell off these kinds of non-performing assets.

What is a Short Sale?

On the other hand, short sales are properties sold before foreclosure at a discount for the reason that current market value is lesser than the loan amount. The homeowner still has the title but the sale must be endorsed by the bank, who endures a capital loss upon sale. To keep away from the extra cost of the foreclosure process, banks are willing to sell properties at or below market value.

Foreclosure Facts

According to Re/Max, the average price of foreclosed houses was $185, 000 while that of other regular properties was $267, 300 in May 2011. In addition to prices, bank owned properties can be bought much more quickly over a typical short sale made.

Despite the low price, bank owned properties have their share of problems. These foreclosed properties typically sit vacant for weeks or even months, lack regular maintenance, attract squatters as well as copper thieves and need repairs. Most banks promote their foreclosed properties in an “as is” condition. So, anyone who will buy must find what repairs are essential and invest money and time to fix those difficulties.

Short Sale Facts

This type of distressed property is in relatively better condition, and often repairs are not necessary. Since properties are still occupied by homeowners, the house is usually maintained. Roughly 80% of these properties are of good quality.

However, short sales have their drawbacks. This type of foreclosure may take a long process, requiring months to complete. You need to be qualified and have a much longer time horizon to buy the property. Reason for the long process is that all pledgees must approve the sale. But, the short sale process can be sped up if the seller’s agent is experienced in negotiating with the bank and closing short sales.

Foreclosure Process

Depending on the state a borrower lives in, foreclosure may or may not involve the judicial system. Following three to six months of missed installments, a loan specialist will record a notification of default, which informs a borrower that he is confronting foreclosure and gives him a reestablishment period to make things right by paying off obligations or settling any dispute. The length of the reinstatement period changes by state, with a few states giving borrowers a negligible five days to settle disputes and obligations and others giving up to 90 days.

If the home loan’s unpaid balance is not paid off within three months, the mortgage holder gets a notification of sale. The property is then sold at a trustee sale to the highest bidder, who must pay in real money inside of 24 hours. The opening offer is generally equivalent to the outstanding balance and any extra lawyer charges the bank might have incurred.

Short Sale Process

When the market value of the property is less than the outstanding mortgage principal, and the borrower cannot afford to pay the loan, the lender (one or more banks) can choose to accept a short sale. In a short sale, the proceeds from sale of the property falls short of the mortgage balance, which is one reason lenders may hesitate to accept the offer for a short sale. Any unpaid balance owed to the lenders after a short sale takes place is known as a deficiency. Short sale agreements are not necessarily borrowers releasing themselves from their obligations to repay any shortcomings of the loans unless explicitly agreed between the parties.

Distinctions Between Short Sale & Foreclosure

  1. For borrowers: The current government is actively trying to halt the tide of foreclosures in the United States. For this purpose they began the MHA program, which stands for Making Homes Affordable and is an attempt to reduce the mortgage payments on both primary and secondary mortgages. The hope is that more people are able to stay in their homes will be.Those borrowers who are still unable to keep their homes, even with the help of the MHA program can use a short sale as a way to get out from under their obligations to the lender. If this was the primary residence of the homeowner, they are not liable for taxes on the forgiven debt, and may even be eligible for a $ 1,500 to help pay for moving expenses.
  2. For Lenders: Lenders participating in the MHA program are required to reduce the mortgage payments in an effort to make payments affordable. Under this program, lenders can also get up to $ 1,000 in incentives, even without loan modification. To make this possible, the lender must allow a short sale if the borrower prefers this option.
  3. Credit Scores: Neither foreclosures nor short sales offer an advantage over the other in terms of the negative influence on a person’s credit score. Industry experts along with Freddie Mac and Fannie Mae say that this decline in credit ratings will be between 200 and 300 points.
  4. Waiting time between mortgages: Freddie Mac and Fannie Mae guidelines stipulate that a borrower must wait for 5 years before qualifying for any new mortgage following a foreclosure. In the case of a short sale, the waiting period for a new mortgage is merely 2 years.


As a homeowner, if you qualify for aid that will lower your payments, maybe you will be able to avoid a foreclosure. If not, trying to work out a short sale with your lender probably is your best bet.

From the lenders standpoint a short sale might be best because foreclosures might be both costly and time intensive. Ultimately the impact of your foreclosure to your credit rating and ability to borrow later on is reason to choose the short sale above the foreclosure. Lenders will look more favorably on the borrower that tried to cooperate with the bank (via short sale) than one who just walked away.


Sample Hardship Letter for a Mortgage Loan Modification

Are you behind on your mortgage? If you do not think you’ll be able to get under the current terms of your mortgage, but you are willing and able to be make payments, you might want to consider applying for a loan modification from your lender. If so, you need to write and submit a hardship letter with information about the circumstances that led to the current financial situation combined with a request to consider other loan terms.

Through a mortgage hardship letter, debtors inform creditors that they’re unable to make their mortgage payments. This letter describes the occasion or motive for their incapability, examples of which include being recalled to active navy duty, dying of a co-borrower, divorce, assets damage, activity loss or illness. In the letter, the borrower can also request a loan modification, payment abatement period or some other kind of relief.

By and large, it takes after the arrangement of an essential business letter: introduction, descriptive paragraphs plus a conclusion. The distinction is that, in the conclusion, the borrower makes a solicitation. It is written, marked and dated by the borrower, and should not be emailed. It is sent to the bank or home loan moneylender and turns out to be a piece of the borrower’s record upon receipt. Ideally, to guarantee that the letter is appropriately reviewed, it ought to be sent to a particular loan administrator and not to the general attention of the bank. It should also be dispatched to the existing loan management office and not a bank branch or other place.

Common hardships that financial institutions usually find acceptable:

  1. Loss of employment
  2. Lower Income
  3. Death or Illness (of the homeowner or family member)
  4. Divorce or Separation
  5. Flexible Rate Reset-Payment Shock

Everyone experiences issues in life, and they usually are not your fault. For example, no individual homeowner may very well be blamed for the particular nationwide banking crisis, recession, or housing bubble that this country experienced. These issues have far-reaching consequences and have placed many homeowners in a difficult position.

If you’ve been laid off from your job caused by forces beyond your current control, that is not your fault. Many hard-working, loyal employees lost their jobs at companies they worked in for years due to reasons unrelated to their job performance.

Property holders have missed work on the grounds that they were lamenting the passing of a relative, or they were getting treatment for a physical or emotional sickness. Notwithstanding the money related expenses of managing these occasions, the time far from work means lost wage. Cash is lost going and coming, and it’s no big surprise that individuals encountering these hardships can fall behind on their home loan. The uplifting news is that your home loan bank can take the issues you’ve had into thought while assessing you for a loan modification.

The reason for your hardship is not the bank’s essential concern. What’s imperative to the bank is that the hardship is over, or will be over when they change your loan. They need to see that the issues that made you cause harm have been determined, that you’re in a position to get back on track, and that you merit better terms.

It is worth noting that the hardship letter is just one of the required items in your loan modification application, and you may be refused for many reasons. The best letter in the world does not guarantee success, but it is a necessary piece of the puzzle, and can help the bank to see you as a real person rather than an anonymous name that owes them money.

If you would like to write your hardship letter yourself, it’s important to avoid common mistakes it is important to common mistakes, like writing too much, or failing to comprehend the bank’s point of view.
Whether you need to write your hardship letter on your own or not, still consider consulting with an experienced attorney to assist you through the loan modification application process. Although getting a loan modification approval is never a guarantee, you can increase your odds by working with a lawyer that understands the process and has a proven track record. Utilizing the services of a foreclosure defense law firm will allow you to present your best self to the bank, and frees you to recover from your hardship and work on improving your situation.

Remember, a real, legitimate, and genuine articulation demonstrating your purpose behind the asked for loan modification, deed in lieu, or a short sale is the best. Property holders can likewise check their qualification for the HAFA Short Sale including the $3,000 Seller Relocation Assistance before writing the Hardship Letter. Utilize the free Sample Hardship Letter guide to offer you some assistance with overcoming writers’ block and compose a successful Hardship Letter however never manufacture a Hardship Letter that is not totally reflective of your individual circumstance or duplicate somebody else’s Hardship Letter.

While there isn’t guarantee that your request will be granted, lenders are often willing to do business with borrowers who are proactive in seeking modifications as opposed to allowing outstanding financial loans to fall additionally behind and shift toward foreclosure. You may uncover (as do many) that this banker is willing to do business with you to maintain your home.

Disclaimer: Readers with credit, legal and tax questions are advised to seek the advice of an attorney or tax advisor. The above information should not be construed as legal or tax advice.

Download a free loan modification hardship letter guide here at:  You may need to fill in your name, email and state before you download

PS: You can download and upload to your site, citing reference, whatever works…


Sample Of Hardship Letter For Short Sale

Many homeowners unfortunately find themselves in a unique situation of owning more on their home than what it is worth. In some cases, the homeowner can simply remain in the home until property values rise and the mortgage balance is reduced. However, in other situations, the homeowner must sell the property quickly for a loss, and this is often due to a financial hardship. In order to move forward with a short sale, the lender must agree to accept less than what is owed to them and to release the lien without payment in full. Typically, the homeowner will make a formal request to the lender in writing, and you may be looking for a sample of hardship letter for short sale that you may inspire you to draft a great letter of your own.

Where to Find Sample Hardship Letters
When you are looking for a sample of hardship letter for short sale, you do not need to look very far. There are numerous examples online that are readily accessible to you with a quick search. In addition, there are also writing instructions and tips that you can follow to more effectively draft a letter that will generate the desired response for you. It can be helpful to read through several samples before you get started writing your own letter.

Drafting Your Own Letter
When you are drafting your own letter, you can use sample of hardship letter for short sale to get an idea about the type of information that should be in it as well as the layout and length. The letter should have all relevant information, including the property address and loan number. It also should explain your financial hardship, such as the loss of a job, the death of a family member or other circumstances. In addition, it should clearly state that the situation is not expected to improve. If you indicate that your financial situation will improve, the lender may believe that you will soon be able to begin making regular mortgage payments again and will not be inclined to settle the debt.

A sample of hardship letter for short sale can provide you with the inspiration you need to get started drafting your own letter. Take time to read through your letter several times to ensure that it covers all of the bases and to verify that it clearly states that your financial situation will not be improving.

Steps To Getting a Divorce in Virginia

While the decision to file for divorce may not have been an easy one to make, you may now be ready to move forward with this plan. Filing for divorce can seem overwhelming and confusing, but by understanding more about the steps to getting a divorce in Virginia, you may be able to more easily move forward with this process. After you have determined that you meet the residency requirements for filing for divorce, you can move forward with the other steps to getting a divorce in Virginia.

Make Decisions about the Divorce
In Virginia, you can file for a full or partial divorce. With a partial divorce, you will live separately, but you will not be permitted to marry other people. You must also determine the reason for filing for divorce, such as cruelty, abandonment or other reasons.

Calculate Child Support
There are additional steps to getting a divorce in Virginia if you have children. You will need to calculate how much child support should be paid to the parent who will have primary custody, and there are forms available through the state to facilitate this calculation. The couple may also attempt to agree on child custody on their own outside of the court.

Divide Your Assets and Debts
If a couple can agree on how to divide assets on their own then this may be a better overall solution than allowing the courts to do it. The couple can attempt to sell items that they no longer need or want. For example, it is common for a divorcing couple to sell the home and some of its contents. The money may be used to reduce or eliminate debts, and this often can simplify the task of dividing assets and debts.

File the Forms
The final steps associated with filing for divorce in Virginia relates to completing the required forms and filing them. The forms are generally filed through your local County Clerk’s office. The forms will also need to be officially served to your spouse. A hearing will be scheduled, and the divorce typically will be finalized after a final Divorce Decree is filed with the County Clerk’s office.

There are some instances when a partial divorce may be granted immediately, but most will need to follow these steps to getting a divorce in Virginia. You may work with a lawyer to complete the process or for legal representation.

Can I Short Sale An Investment Property?


Some people erroneously believe that short sales are only an option for personal primary residences. This is not the case.

You can still do a short sale for investment properties as long as the house is worth less than you owe + closing costs and you have a documented hardship. Hardship for an investment property could be any situation affecting your finances and/or the profitability of your investment property. This could include a significant damage or unexpected expense for the property (such as HVAC, structural, or other replacement necessary), an extended unplanned vacancy, decrease in rents, etc, to the point that you can no longer afford mortgage payments.

Your credit will still be negatively affected, but short sales are an alternative to foreclosure or an opportunity to get out from under a struggling investment property.

To learn more about whether a short sale is right for you, call Rob’s team today at 703-212-3344.