This entry is a continuation from Part 1, posted earlier.
#2. How does a short sale work?
A short sale is when your bank agrees to release you from your mortgage debt when you sell your home for less than what you owe the bank. A lender’s agreement to accept a short sale deal is completely voluntary. Most short sale attempts ultimately fail because the lender is not willing to release you from your debt and take a loss on their loan unless they get most of their money back. If the short sale will net less than 80% of the loan amount, it’s a good bet that a lender will refuse to authorize the sale.
If your lender agrees to let you try a short sale, they will probably offer you an agreement with specific terms that generally favor them and protect them from unnecessary losses. Often a lender will send you a Notice of Default and Election to Sell your property while simultaneously telling you they will allow you to “short sell” your home. Don’t be fooled–they can and will still proceed with the foreclosure sale unless they receive an offer from a purchaser prior to the sale. Verbal representations from agents of the lender to postpone the foreclosure sale and give you more time to short sell the home are not binding on the lender unless they are in writing.
Currently, we are hearing from more realtors that short sales are picking up. We are working with local realtors to review short sale agreements and get the foreclosure sale postponed for a better chance to sell the home.
For all 8 questions stay tuned for updates to this blog or go to my legal website. You can also watch my video explaining the 8 foreclosure questions in brief. If you are in the Beaverton, Hillsboro, or Portland Oregon area, you can get my telephone number and call in your questions or comments, or just post a comment to this blog.