By: Jamie L. Harris
You have probably heard the term “short sale” before but may not be familiar with what the short sale process entails. A short sale can be an alternative to foreclosure for financially distressed homeowners. A short sale involves selling a home for less than the total mortgage amount or other indebtedness owed against the home. Typically, this involves the lender forgiving the deficiency balance from the short sale but not all short sales involve lender forgiveness. As part of the short sale process, many lenders require you to fill out documentation and provide proof of hardship to be eligible for a short sale. Here are some considerations and recommendations for navigating the short sale process:
- The first step of the process will be reaching out to the lender to confirm if you are eligible for a short sale.
- Because the paperwork can be burdensome, it is advisable that you submit all the required documents as quickly as possible. Please note this process can take several months for the lender to decide.
- Because the process can be intensive, you may want to consider hiring an attorney to guide you through the process.
- You will also want potential buyers to understand that the sale is a short sale and subject to lender approval. A buyer who is willing to wait through the process and either has cash or a pre-approval letter is ideal.
- Because you are seeking forgiveness on a portion of the mortgage indebtedness, you will need to consult with an accountant to confirm if there will be tax consequences to the sale.
- If the property is in foreclosure, the title company may require you to obtain an agreement to dismiss or actual dismissal of the pending foreclosure action before the short sale can be completed.
About DelCotto Law Group
DelCotto Law Group is Kentucky’s asset preservation and business restructuring law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email [email protected] or reach us on our contact page.