If you feel you can't afford you mortgage anymore, a short sale is one way to get relief. A short sale involves selling the home for less than its current value. A short sale must be approved by the lender, who agrees to cancel the primary mortgage without expecting full payment. However, lenders often say no to a short sale. Here are some tips on handling a short sale decline.
Submit a Complete Short Sale Package
When you apply for short sale approval, you must submit several documents. If any document is missing, it results in immediate denial. In some cases, the lender could misplace documents.
Get a listing of all the required documents, and check to ensure you complete each form correctly. Make copies of each document in case the lender loses forms or the package gets lost in mail.
Try to Get a Higher Offer
A lender commonly obtains several appraisals to assess value, and they could request a BPO ( Brokers Price Opinion). A Broker's Price Opinion is a tool used by a real estate agent or mortgage lender to find the potential sell price of a property. The listing of offers submitted by the agent should have a comparative market analysis to support the offers. The lender determines if they will profit from the short sale offer or a foreclosure.'
Market values can increase in the future, so the lender may decide to proceed with foreclosure on home owners behind on payments instead of approving a short sale. Try to negotiate a better offer with a buyer.
Prove to the buyer why their offer isn't supported by comparative market analysis. If you already accepted an offer and the buyer doesn't negotiate a better offer, cancel the offer, and relist your home.
Claim a Hardship
It isn't necessary to be behind on payments to get a short sale, but you usually need a hardship claim. Lenders will not approve short sales just because you found a house you like better. The lender determines if you still can afford to make payments based on their evaluation of the seller.
Write a letter to the lender, and prove you are in hardship. Examples of hardship include layoffs, job transfers, military service, unexpected illness, death in the family, or unexpected home repairs. Discuss how your situation occurred along with documents to prove income loss or lack of sufficient assets, and mention any solutions you used to fix the issue.
Review the offer price. If the lender thinks the offer price is too high, it means you will have money left over after a short sale, which doesn't count as hardship.
Navigating short sales can be complex. It is advised to seek the services of a real estate lawyer.
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