Short Sales

3-9-2014: So why are short sales taking so long? According to the Zillow Blog, banks, bureaucracy, lost paperwork, and more than one lender can’t agree are some reasons.

8-23-2013: It really helps if credit bureaus have a special code for short sales since they are treated differently when scoring credit scores. Fanne Mae corrected it in some credit bureaus

5-7-2013: Anyone ever hear of Short Sale Leasebacks where the lender allows a short sale and you lease the property back? Watch for my post later this week…

2-8-2013: Short sales are still a viable alternative from foreclosure and one that might let you out with less exposure and shorter refresh before you can purchase a home again. This article outlines 10 misconceptions of short sales…so be careful, but don’t get scared using a short sale as an alternative to foreclosure.


Update 4-25-2012: FHFA (Federal Housing Finance Agency), tasked with US Government oversight of Fannie Mae & Freddie Mac, is trying to set guidelines to get banks to responded to Seller and Buyer within 30-60 days after submitting paperwork or offer to purchase the property. Source:


Update 4-20-2012: Yes, banks “will” and “do” foreclose on properties during contract talks with same bank regarding approval of the short sale.

Note: I personally know a case where the same bank proceeded with foreclosure action against the “buyer” who bought same house in a short sale two months before they served papers on “new” owners! That’s a strong case for buying Owner’s Title Insurance.


Update 3-20-2012: A simple comparison between Short sales and Foreclosures. Remember, both actions drop your credit score and involve forgiveness of debt which is normally taxable income. Source:


Update 3-3-2012:  List of ways Sellers can interfere with short sale transactions includes getting behind on mortgage payments and not cooperating with your lender.  Check many of the ways here:

Update:  2-18-2012:  US Senate Bill (S.2120) and House Bill (HR 1498) proposed to require decision from lenders within 75 days whether or not they will approve a short sale. 


I think most people have an idea of the definition of short sale (i.e., selling a property for less than the amount of the loan(s) payoff).

An interesting side note to short sales is that many lenders are paying” sellers to sell their home under a short sale or just leave their homes, but in good shape.

Source 1:

Source 2:

I’m not an agent who lists or negotiates the settlement of short sale properties between banks and borrowers, nor did I sleep in a Holiday Inn recently, but aside from the SAFE Act of 2008 (which outlines licensing requirements of loan originators and others in the mortgage industry more qualified to discuss loan modifications), I have seen and read some expectations:

Here are the IRS’ Ten Facts for Mortgage Debt Forgiveness on what is normally taxable income – forgiveness of mortgage debt –,,id=205004,00.html

Here are some potential things to expect to produce, create, or see when running numbers or negotiating with the bank…

1.) preliminary net sheet – shows what the homeowners’ may receive upon the sale of property, net of any outstanding debts and other fees —- usually zero these days!

2.) hardship letter – succinctly describes facts surrounding homeowners’ situation and addresses why they are forced to pursue short sales,

3.) proof of income and assets – facts disclosing your finances and assets to prove the homeowners can’t afford to meet their mortgage payments or payment of the loan, and

4.) bank statements/financial records – show deposits and withdrawals homeowners have made using their bank accounts and disclosure of financial assets.  (i.e., Can the afford and just don’t want to pay?)


References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

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