Phoenix Homes and Foreclosures

Help understanding the mortgage short sale process

WHY HOMEOWNERS SHOULD DO A MORTGAGE SHORT SALE

(HELP #4) Read part 1 of 5

A short sale will be reported as “loan paid NOT as agreed” on a credit report. The number of 30, 60, and 90 day late mortgage payments before the loan payoff does not help and can be more damaging than the short sale process.

The foreclosure process will affect the homeowner’s credit report for between 7-10 years. A Deed in Lieu of Foreclosure (owner signs the house over to mortgage lender to avoid the foreclosure process) has less of an effect on their credit then a foreclosure. However, the mortgage short sale has the least affect on their credit. To summarize:

1. Foreclosure process (most effect on credit)
2. Deed in Lieu (less effect than foreclosure)
3. Short Sale process (most help preserving credit)

Many homeowners who participated in a short sale process were able to purchase another home within 2-4 years, depending on other credit issues. Additional benefits of a short sale to the owner include:

• helping get the short sale home sold and mortgage paid off
• mortgage lender accepting a discounted payoff from the short sale
• no out-of-pocket cost for the short sale process to the owner (mortgage holder will help pay all short sale costs)
• no worry about house and mortgage after the short sale

ITEMS YOUR MORTGAGE LENDER WILL PROCESS

(HELP #5)

Here is a list of items needed by most mortgage lenders to help complete the short sale process:

• Letter of authorization allowing us to help process the short sale on your behalf
• Hardship letter to inform how you have been affected by:
  o Family illness or injury
  o Job relocation
  o Job loss or significant income loss
  o Divorce or split of domestic partners
  o Adjustment in mortgage payment or unforeseen increase in living expenses
  o Anything else life can throw at a person
• 2 months pay stubs for each homeowner on the loan
• 2 months bank statements, all pages, for all accounts
• 2 years tax returns
• Comparative Market Analysis
• Listing agreement
• Short sale purchase contract and all counter offers
• Buyer’s LSR (loan status report) for the short sale process to show prequalification for purchasing the property
• Short sale settlement statement from the title company showing how the mortgage lender’s net proceeds are affected after all short sale costs are paid

Read part 1 of 5

Read part 3 of 5

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