Difficult times create financial problems for most homeowners, and in such circumstances, a short sale may seem to be the most viable option at their disposal. If you are in a similar situation, you should consider consulting with a short sale attorney who can provide legal guidance and enlighten you with the pros and cons of going for a short sale. They will also explain any other options you may have to overcome your current circumstances, verify the legal soundness of the short sale documents, and provide advice about personal liability after the process is complete.
In a short sale, you need to get approval from your lender to proceed with the process. This is because generally, you get a lower price for the property than what you owe, and you need consent of the lender that they will accept the less settlement amount for your mortgage debt or seek deficiency judgment after the short sale has been finalized.
Qualifying for a Short Sale
Before you can proceed with a short sale, you need to qualify for it by getting approval from your lender. Lenders want a seller to provide genuine or legit reason that they have no choice but to short sale their property. Here are some requirements you must meet to be eligible for a short sale:
1. The Market Value of your Property Has Dropped
If the drop in the market value has decreased the worth of your home lower than the mortgage debt, you can request for a short sale to settle the outstanding amount. However, if there is still some unpaid balance, you may have to pay a prepayment penalty.
2. Financial or Other Forms of Hardship
You must submit a letter of hardship to your lender, explaining why you are unable to pay your mortgage payments and have to short sale your home. Most people have a vague idea about what constitute as hardship in the eyes of a lender. A few examples of hardship include divorce, bankruptcy, medial emergency, unemployment, and sudden illness. Examples of what does NOT constitutes as hardship are pregnancy, buying another home, unhappy with the neighbors, and bad purchase decisions.
3. Defaulting on Mortgage Payments
If you are not current with your payments, you may be able to qualify for a short sale. The lender will evaluate your financial situation and may want to try out a few alternatives before agreeing to the short sale.
4. You Have no Assets
Lenders request a copy of a financial statement or tax returns to determine whether you have any significant assets that can be liquidated to cover the shorted difference. If there are such assets, then the lender is likely to reject your application or seek deficiency after the short sale has been finalized.
Working with an experienced short sale attorney can help you better negotiate the terms with your lender. Your attorney will scrutinize the documents and make sure the lender is not tricking you into signing anything that may affect you in the long run. If the lender has agreed to waive off the deficiency judgment verbally, your attorney will make sure it is also in black and white so that they cannot come after you to claim it. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.
