Short Sales
The main purposes of a short sale are to help a financially distressed borrower avoid a foreclosure of
their property and help protect their credit rating from deteriorating. For this sale to take place, the
following conditions must be met:
- Borrower must apply and be eligible to participate in a short sale program.
- Mortgage holder approves the short sale and set any terms as necessary.
- Mortgage holder approves sales price for property to be listed.
- Any incoming offers will be reviewed and accepted by mortgage holder.
- If and after an offer has been approved, the negotiation with lien holders, if any, will be
necessary. Lien holders must approve a settlement amount for them to release any judgments
and/or deficiencies.
- Such amount will be less than what the borrower owes.
- Settlement amount will come from the proceeds of the sale.
- Please note that if settlement with lien holder is not met, the short sale will not be able
to close.
- Furthermore, if the buyer is seeking any offer negotiation, it must be approved by the mortgage
holder.
- Once all the parties involved have come to an understanding of the details the transaction
entails, closing will be successful.
Foreclosures
The main purpose of a property foreclosure is for the mortgage owner to secure a defaulted loan
through an auction sale or a repossession of the property. The process starts when the mortgage owner
files a public default notice (also known as Notice of Default or Lis Pendens). Then, depending on the
state, the process can have one of the following endings:
- The borrower may pay off the loan that is in default during a pre-foreclosure period, or grace
period, determined by state law.
- The borrower may be able to do a third-party sale during the pre-foreclosure period.
- A third party buys the property at a public auction at the end of the pre-foreclosure period.
- The mortgage owner takes ownership of the property. Such ownership can be given through an
agreement with the borrower during pre-foreclosure (ex: cash for keys or a deed-in- lieu) or by
buying back the property at the public auction.
- Properties repossessed by the mortgage owner are also known as bank-owned or REO
properties (Real Estate Owned)