Mortgage Short Sale Terms

Wednesday, November 25th, 2009 at 2:30 am

When home owners are pushed into the brink of home foreclosure, bankruptcy, and disgusting credit scores, one of the acts that they can do to save their name and dignity is to undergo a mortgage short sale. In a mortgage short sale, home owners sell their house and use the payment to fulfill their dues to the mortgage lender. In this set-up, home owners ask the lender to receive payment smaller than what they really owe.

For example, if home owners have a debt of 50,000 USD, but they can just sell their property for only 40,000 USD, they can ask the lender to receive the 40,000 USD and forgive the 10,000. The graceful exit that Mortgage Short Sale provides does not mean that the home owners wont face any consequence in the future. Even if they didn’t reach the state of foreclosure, their credit scores will still be slightly affected.

The discounted price that mortgage lenders may give to borrowers cannot be obtained just like that. In order to facilitate a Mortgage Short Sale, home owners must prove to their lenders that they really cannot manage to pay the full amount that they owe.

This can be done by writing a hardship letter that clearly and honestly explains why they have defaulted in paying for their property, and how much money can they only afford to give back. In order to back up the hardship letter, financial statements, bank accounts, and other files revealing home owners’ assets and liabilities must be shown to the lender.