About Government Refinance and Home Purchase Programs

Information and Updates on Government Mortgage Programs

Millions of Americans owe more on their homes than the property is currently worth. (A condition commonly known as being “underwater” or “upside down” on a home.) In some cases — particularly cases where a government-backed refinance has been thoroughly researched and has been ruled out as a possibility — the best solution for such families is to “sell short”. A short sale is the process of selling a home that is underwater for whatever price the market will bear. Normally the difficult part of a short sale is convincing the current lender(s) to accept an offer at current market prices as payment in full. That is because the lender has to forgive a portion of the current debt in a short sale situation. For instance if you owed $200,000 on your home and it is only worth $150,000 at current market values; with a short sale you would list the home, get an offer at $150,000, present that to your current lender and ask them to accept the offer as payment in full on your debt. If the lender accepts that offer your debt should be forgiven on the home. The incentive for the lender to accept a short sale offer is the fact that if the lender were forced to foreclose they would probably lose a lot more money than they would by accepting the short sale offer.

Normally the first step into looking in to a short sale is to talk with a local real estate agent who understands short sales. Such an agent should be able to advise you on the steps needed to list a home as a short sale and guide you through the process and negotiations with your current lender as needed.

We recommend you talk with an authorized real estate agent in your area about a short sale.

Comments (0) Posted on 30 Apr