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Short Sale Approval

Short sale approval occurs when mortgage holders agree to sell a property for less than the balance of the mortgage note. The main goal of a short sale is to minimize loss for lenders and keep homeowners out of foreclosure. To obtain a short sale approval there is a complex process and lengthy paperwork that must be completed. Homeowners will work with a Bank Loss Mitigator to gain a short sale approval.

Short sale approval is based on a number of conditions and eligibility requirements that must be met. The homeowner must be three or more months past due on the mortgage note for lenders to consider a short sale. The home must be worth less than the amount due on the mortgage note. A homeowner can work with a realtor or conduct an internet search to provide comparable sales prices of homes in the area.

Homeowners must provide documented proof they are having financial difficulties in order to obtain short sale approval. Bankruptcy, medical conditions, death, divorce, and loss of income are financial situations where a short sale might be approved. A financial statement which details income and debts of the homeowner must be provided. A short sale hardship letter which explains the circumstances which led to financial distress is required.

Homeowners attempting to acquire a short sale approval must have little or no equity in their home. Additionally, they cannot have other financial means available to repay the mortgage note. Other required paperwork could include a realtor’s contract, tax returns, investment or bank statements, and proof of a buyer and their financing. A bank loss mitigator must review the information to determine short sale approval is in the best interest of both the lender and homeowner.

Before approving short sales, bank loss mitigators will attempt other resolutions with the homeowner. For temporary financial circumstances, a forbearance agreement might offer a better solution and enable the homeowner to keep their home. For those who have permanent financial restraints, refinancing or a loan modification may offer a better solution than a short sale.

Banks have strict policies concerning short sale approval. Since they are losing money, they want to ensure a short sale is the best solution for the situation. Short sales will not be approved without correct paperwork and a buyer ready to purchase the property.