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Stopping Foreclosure with a Short Sale

By sharon | October 2, 2008

For troubled homeowners looking for a way to stop foreclosure, there is an option that has become quite popular these days – the short sale. An agreement between the distressed borrower and the lender, this transaction will effectively stop foreclosure and save both parties much inconvenience.

Stopping Foreclosure with a Short Sale

In simple terms, a short sale means that the lender is agreeing to be paid an amount that is less than what the homeowner owes in mortgage debt. A third party buyer is usually involved in this transaction. Keep in mind that the lender usually agrees to this transaction because a foreclosure might mean greater financial loss.

Before the lender agrees, the homeowners must prepare the necessary documents to show that a short sale is indeed an option beneficial to both parties. These documents include a Hardship Letter, Statement of Assets and Liabilities, Preliminary Net Sheet, Bank Statements, Purchase Agreement, Comparative Market Analysis and Listing Agreement.

Some distressed homeowners include a request to the lender not to file a negative report to the credit agencies. Of course, the lender is not obligated to accommodate such request.

If you are having difficulties preparing these documents, you can always hire the services of a reliable real estate agent. You should be prepared in case your lender refuses to pay for the agent’s commission and other items in the deal such as termite inspection and home protection plan. If the lender considers these documents sufficient enough to meet their short sale requirements, you can now proceed with the sale.

Although a short sale is quite effective in stopping foreclosure, it will mean still mean losing your home. Before exploring such option, you should make sure that you have spoken with your lender about a possible loan modification or repayment agreement in order for you not to lose your home.

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