Short Sale Frequently Asked Questions for Property Owners
What is a mortgage default?
A mortgage is considered to be in default when one or more monthly payments have been missed.

What solutions are available if I am in default on my mortgage payments?
You may qualify for a broad range of help. Some solutions are:
Short Sale/Payoff (Short Sales occur when borrowers sell their properties for amounts that are less than the amounts owed to the lender.)
Forbearance Agreement (A formal agreement between a borrower and a lender to temporarily postpone an on-going foreclosure.)
Loan Modification (A mortgage modification is a process through which your mortgage lender changes any or all of the following:
1- Your Intrest Rate, 2- Your Principal Balance (through a reduction), 3- Your Loan Terms (example: from an adjustable to a fixed rate.)
Deed in Lieu (
OF FORECLOSURE: Used by owners to voluntarily convey the title of their property to the beneficiary (lender) to avoid the negative credit consequences of a foreclosure. Lenders are generally reluctant to accept a "deed in lieu" unless the title is free and clear of any other encumbrances junior to theirs and the owners execute an estoppel affidavit acknowledging that they are acting volitionally, with informed consent.)

How do I qualify for assistance? 
Borrowers need to prove that they are experiencing a substantial financial hardship. 
How do I qualify for a Short Sale? 
A borrower must prove that a hardship exists. The lender must be willing to accept the short sale proceeds as full settlement of the debt. 

What sort of hardship would my lender consider legitimate?
To some extent, that will depend upon the mortgage company considering the Short Sale request. Generally, so long as the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the Short Sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.
Below you will find a list of “hardships” that are common and frequently accepted by mortgage lenders.
    • Family illness or injury
    • Illness or injury in the extended family – particularly if it forces relocation
    • Job relocation when the property is equity deficient
    • Job loss or significant income loss
    • Divorce or split of domestic partners
    • Adjustment in mortgage payment or unforeseen increase in living expenses
    • A mortgage payment that is simply unmanagable
Why would a mortgage company agree to accept a Short Sale?
There are actually several reasons why a mortgage company would approve a Short Sale payoff, including the following;
    • Legal Concerns
      Mortgage lenders have come under legal pressure to work with borrowers to equitably resolve situations where borrowers are unable to meet their mortgage obligation, particularly when the borrower makes an effort to arrive at a compromise solution.
    • Wall Street is Watching
      Mortgage lenders rely heavily on their ability to package and sell bundles of loans on the secondary mortgage market. They need to sell these bundles of loans in order to put the funds back to work by loaning the money again and collect loan fees along the way. If mortgages perform poorly after they are sold it could impact the lender's ability to sell their loans on the secondary market. A successful Short Sale gets the loan payoff resolved quickly.
    • Asset Management Expenses
      If a lender acquires a property through foreclosure, the property will be managed until it is repaired and resold. It is expensive to manage real property assets - homes – spread throughout the region, the state and possibly even the nation. Keeping properties maintained, keeping utilities on, making repairs and the administrative costs attached to these activities are all costs the lender would prefer to avoid. A successful Short Sale eliminates most of these costs
    • Reserve Requirement
      Delinquent and non-performing loans place another burden on mortgage lenders. For all delinquent and non-performing loans lenders must set aside funds in reserve to deal with potential losses. These funds cannot be put to work generating new loan fees until the bad loans are resolved. A successful Short Sale lets the lender put more money to work.
What documents do Seller need for Short Sale?
1  - Copy of most recent mortgage statement(s)
2  - Two (2) years tax returns – most recent

3  - Two (2) months most recent pay stubs
4  - Two (2) most recent bank statements for all bank accounts and brokerage accounts  EXCEPT information on retirement accounts 
5  - Hardship Letter, A hardship is a life changing situation that affects the borrower dramatically and results in an inability to pay the mortgage debt. Sample Seller's Hardship Letter
Some examples of hardship include separation or
divorce, medical bills, inability to work due to health reasons or illness, death of a spouse, job relocation, reduced income or unemployment, business failure, unemployment, reduced income, too much debt, payment increase, damage to property, …

6  -Signed Letter of Authorization to your Real Estate Broker, authorizing the Lender to speak with Her/Him 
7  -List the property for sale
8  -Cooperate with access, showings, offers and realtor
9  -Vacate the home at the close of escrow
10-Be responsible to maintain the home in "show" condition
11-Cooperate with bank and bank negotiators and provide all requested documentation.

What is Necessary from a Successful Short Sale Negotiator?            

  1- Understand the lender’s language                                  
  2- Reliable – a company with name to protect
  3- Time, time and more time
  4- Accurate paperwork
  5- Experience
  6- Legal knowledge
  7- Negotiation skills
  8- Strong supportive administration
  9- Capability to handle high volume
 10- Legal reasonability

Is Short Sale right for me?
Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will be unable to meet your obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through foreclosure.

As you consider the option of pursuing a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is, for them, much better than a foreclosure.

Bottom line, your lender wants to work with you.
Can any Real Estate Agent assist me in selling my home in a short sale situation?
Possibly, but usually you have only one shot to succeed in a short sale transaction, it is therefore highly recommended you work with an Agent experienced in short sale negotiations that can properly represent you and is specialized in this field.
If I do a Short Sale, How Much will I have to pay to sell my Home?
Nothing. It’s true, in most cases you will pay literally no sales costs if your lender approves the Short Sale. All commissions, title and escrow fees, and even most repair expenses are paid by the lender as part of the Short Sale approval. I will include the *following clause in the contract; "Seller’s agreement to sell is subject to approval by existing lender of a Short Sale at no cost to Seller. Seller shall not be required to deposit funds to close escrow."

Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.

Can I simply deed my property to someone else and avoid the hassle?
Deeding your property to someone without paying off the loan is nearly always a bad idea. In the first place, the lender still considers you primarily responsible for payment on the loan. If loan payments do not get paid, or if the lender ultimately forecloses, this will show on your credit.  
Secondly, when you deed your property to someone else, you give up control of the property. Along with the deed goes the ability to control the property.

Do not deed your property to someone without paying off the loan unless you have consulted with an attorney.
My Property is in rough shape and need work, can I still do a Short Sale? 
Absolutely. In fact, lenders are more motivated to do a Short Sale on a property that needs work than on a property that doesn’t. The lender knows the risk of loss goes up when they foreclose on a property that needs lots of work.

Aside from expense of completing the work, lenders are simply not set up to get the work done. They are in the loan business, not the fix- it business.

I am concerned about my credit, how will a Short Sale affect my credit?
The big key here is to avoid foreclosure. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit.

By avoiding foreclosure, you will likely be able to resume normal borrowing (car loans, credit cards, consumer goods and such) relatively quickly.
I have two loans, can I still do a Short Sale?
Yes. I can work with both lenders (many times the same lender hold the 1st and the 2nd loans) to put together a Short Sale transaction. Even if the value of your home is below the balance of the 1st mortgage, I can normally get the two lenders to cooperate.
In the end, neither lender wants to own another home through foreclosure.

How do I apply for assistance? 
Contact Farima to consult about the most suitable solution.

Why should I work with Farima?
I am glad you are thinking about this question... The Association of Realtors recently conducted a statewide survey which reported that only 10% of all Short Sales actually closed escrow !!! That's terrible...

the Great News is I am a NAR’s Short Sales & Foreclosure Resources Certified, NVSI Certified BPO Agent, and I have GRI Designation (among the 5% of Realtors Nationwide that holds the prestigious Graduate Realtor Institute Designation).
I have Experience - Education and Tough Bank Negotiations.
Do lenders approve all Short Sales?
In a word, NO. That is why it is critical to work with someone that has extensive experience at getting Short Sales approved.

From the presentation of the Short Sale package to the lender to working with the lenders Loss Mitigations Department, I know how to keep the file moving towards approval.

The first step is to get pre-qualified for a Short Sale. There is no charge for this, and it’s easy.
Call me at (858) 382-8698.