HELP UNDERSTANDING THE MORTGAGE SHORT SALE PROCESS
(HELP #1)
How to understand the process: a mortgage short sale is an arrangement between the homeowners and the mortgage lender(s). A short sale occurs when the mortgage lender or investor accepts less money than owed and considers the debt “paid in full,” thereby permitting the sale to occur. The difference between the amount owed and what the mortgage lender collects on the short sale is known as the deficiency. Mortgage lenders in other states have tried to obtain judgments for the mortgage short sale deficiency and others have forgiven it. Fortunately, Arizona is an anti-deficiency state which will help to preserve your financial health after the short sale process. See legal implications of the short sale process
Note that the word “mortgage” is used in this information but “deed of trusts” are used in Arizona.
WHY DO MORTGAGE LENDERS ACCEPT SHORT SALES?
(HELP #2)
- The mortgage is in arrears
- Property condition is poor
- To help a homeowner with hardships defaulting on a mortgage
- The area or neighborhood has depreciated
- The mortgage lender’s shareholders are concerned with excessive defaulting mortgages; By accepting the mortgage short sale process, the mortgage lender can help themselves by avoiding a lengthy, costly foreclosure process. A foreclosure results in the mortgage lender owning the property (known as real estate owned or REO). REO’s are a liability, not an asset; too many liabilities will cause any business problems
HOW LONG IS THE MORTGAGE SHORT SALE PROCESS?
(HELP #3)
How long will the process take? This is a complicated question that depends on both the homeowner’s and mortgage lender’s situations. The first thing consideration during the short sale process is whether the homeowner has received a Notice of Default (NOD). NOD’s are sent to homeowners 90 days after missing their first mortgage payment. This process ends with the house being sold at a Trustee’s Sale 90 days after the homeowner receives a NOD (unless payments are made). Mortgage lenders can delay the mortgage foreclosure process if the homeowner has a valid contract for sale on the home.
Average short sales can be anywhere from a 2-6 month process from the time of the accepted purchase contract. It is unclear why or how the mortgage short sale process takes that long, but the most common answers seem to be:
increasing numbers of short sales are keeping mortgage lenders very busy
- mortgage lenders who are already losing money are unlikely to hire additional help to process short sales
A short sale can be processed in less time, but is dependent on the mortgage lender and how quickly they respond and process it. It’s definitely important to get the mortgage lender all short sale information they require. As short sale process specialists we constantly follow up and help the mortgage lender process the file.
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