The Short Sale Approval Process Explained!
Criteria of Eligibility for Bank Short Sale
After the recent economic turmoil, people often keep their home at mortgage in order to manage the financial
situation. But later on, they sometimes being unable to make the mortgage
monthly payment due to the various hardships like a temporary phase of
unemployment, or death of a partner/spouse. However, fortunately people can
later on clear the defaulted mortgage loan, and avoid getting into the trouble
of foreclosure either through refinance or through bank short sale.
Bank short sale is an arrangement where the lender allows a
borrower to sell his house at a discount, and to pay the defaulted mortgage
loan. If you have a negative equity or have a mortgage loan more than the value
of your house then short bank sale is best suited for you. However, in U.S. you
need to seek an approval from the banks before selling the house via short
sale. Though the banks and mortgage companies have different guidelines for
approving the short bank sale to the borrowers but generally they do look upon
the following criteria.
The most important determining factor for the banks to
approve a short sale application is the value of the property. If the banks
find that the value of the property is lesser than the mortgage loan debt owed
by the homeowner then the latter are allowed to sell the property at a
discount. But on the contrary, if the value of the property is found to be
greater than the debt then the banks may foreclose on the property.
An important guideline followed by banks in approving a
short bank sale is the letter of hardship. If a homeowner does not possess an
asset nor has current income but wish to go for a short bank sale in order to
clear the mortgage loan then he has to present a letter of hardship to the
bank. The letter must demonstrate the unfortunate circumstances of the person
like temporary phase of a job loss or death of a spouse/partner for which he is
not being able to pay off the mortgage loan. In such cases, a percent of the
mortgage debt will be recovered by selling the house and the remaining amount
will be discharged by the banks.
Another important factor that banks consider while approving
a short sale is your asset. If you have stocks, investment or other assets then
banks expect you to pay the short sale deficiency that is the remaining amount
on the mortgage after the short sale is complete. Banks may even sue the
borrower if they do not pay the short sale deficiency in spite of having a
steady income that allows the banks to secure a successful wage garnishment
against him. However, banks are less likely to sue the individuals who are
dependent on retirement plan or government benefit as they are exempt from the
seizure.
Before approving a short sale, banks also evaluate the
equity in your house. The less equity you have, the more likely lenders grant
your short bank sale application. If the banks find that the value of your
asset is more than the debt you owe then they preferable foreclose on your
property.
Hence, you must remember the above mentioned criteria of
eligibility for getting the approval of short bank sale from the lenders.
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Thanks & Regards
Author: Patricia Briggs
e-mail: writerpatricia@gmail.com
Rick Howard "Top" Real Estate Short Sale Broker Profile
The Foreclosure Process
The foreclosure process contains 3 stages:
Pre-foreclosure, Foreclosure Sale, and Bank Owned Properties
There are three stages during which the homeowner has an opportunity to bring the loan current or sell the property by means of a "short pay" to avoid foreclosure.
After about two to four months of missed payments, the lender orders a trustee to record a Notice of Default (NOD) which is a complaint file with the state. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.
If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder’s Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.
The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the balance within 24 hours. They will then receive the trustee’s deed to the property.
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