A Short Sale, also known as a pre-foreclosure sale, is when you sell your
home for less than the balance remaining on your mortgage. If your mortgage
company agrees to a short sale, you can sell your home and pay off all (or a
portion of) your mortgage balance with the proceeds. You may also be eligible
for the government’s Home Affordable Foreclosure Alternatives Program
(HAFA) which offers short sale and DIL options.
A short sale is an alternative to foreclosure and may be an option
- You are ineligible to refinance or modify your mortgage
- You are facing a long-term hardship
- You are behind on your mortgage payments
- You owe more on your home than it’s worth
- You have not been able to sell your home at a price that covers what you
still owe on your mortgage
- You can no longer afford your home and are ready or need to
What are the benefits of a Short Sale?
- Eliminate or reduce your mortgage debt
- Avoid the negative impact of a foreclosure
- Start repairing your credit sooner than if you went through a
- May be able to get a Fannie Mae mortgage to purchase a home sooner (in as
little as 2 years) than if you went through foreclosure (at least 7
What is the process for a Short Sale?
If you qualify for this option, the process is similar to a normal real
estate sales transaction. You will work with a real estate agent to market and
sell your home. However, your mortgage company will also be working with you and
your real estate agent every step of the way to:
- set the sale price (based on current market value),
- collect financial information and negotiate with other lien holders (i.e.,
your second mortgage company) if applicable,
- review acceptable offers,
- agree to the terms of the sale once a buyer is in place, and
- work with the buyer’s real estate agent and mortgage lender to finalize the
In some cases, you may be eligible to receive relocation assistance to use
toward your moving expenses and to make the transition to new housing
A Short Sale may take up to 120 days, but this could be shorter or longer
depending upon your specific situation. If you are unable to sell your home, you
may be able to transfer the ownership of your property to the owner of your
mortgage (also called a Deed-in-Lieu of Foreclosure).
Gather your financial information—Make sure you have your basic
financial and loan information on hand when you call your mortgage company.
- your mortgage statements, including information on a second mortgage (if
- your other monthly debt payments (e.g., car or student loans, credit card
- your income details (paystubs and income tax returns).
Explain your current situation—Be ready to outline your current
hardship and explain why you are having trouble making your mortgage payment,
the reasons why this is a long-term problem and inform your mortgage company
that you want to sell your home to avoid foreclosure. Your mortgage company will
need to understand the reasons why you are having difficulty in order to find
the right solution for you.
Contact your mortgage company—Tell them you are
interested in a Short Sale and you want to see if you qualify.
Contact a licensed real estate agent—Tell them you are interested in
listing your home for sale (if you have not already done
Your mortgage company wants to help you avoid
foreclosure and, in most cases, will be willing to work with you. The biggest
mistake you can make is to wait any longer to take action. Contact your mortgage
company today to determine if you are eligible for a Short Sale. If you need
further assistance (before or after contacting your mortgage company), contact a Housing
Call your SquareA.org Representative Today