A mortgage short sale refers to real estate being sold for less than is owed on the note. When properly executed, short sales benefit all parties involved. In order to enter into this type of agreement, borrowers must convince their lender to accept less than is owed on the home mortgage loan.

Obtaining mortgage short sale approval is not easy. It is estimated less than 20-percent of short sale requests are approved. Much of this stems from the fact that few people are equipped to undergo the process alone.

Obtaining short sale approval is similar to undergoing an IRS tax audit. Borrowers must present financial records including detailed list of income and expenses, tax returns, pay stubs or record of unemployment benefits, insurance premiums, credit card statements, and bank records.

Mortgage short sale requests are handled each bank’s loss mitigation division. Borrowers work with an assigned loss mitigator throughout the process. The mitigator’s role is to mediate between borrower and lender to arrive at a mutually-beneficial agreement.

Although loss mitigators do not make final decisions, they can make or break your deal. These people are overwhelmed with delinquent accounts, foreclosures and short sales. Mitigators receive a great deal of verbal abuse from angry homeowners. Being nice to the mitigator can go a long way in obtaining a successful outcome.

Another way to improve your chance of approval is by being prepared before contacting your lender. Organize financial documents; create a list of income and expenses and write out an explanation of what caused you to fall behind with payments.

Most lenders require borrowers to provide a timeline of events in writing. This is known as a short sale hardship letter and could be the most important letter you will ever write. The hardship letter can seal your fate, for better or worse. Take time to construct a well-written letter that not only includes circumstances that caused mortgage delinquency, but any actions taken to rectify the situation.

If you want to sell your house for less than is owed and walk away owing nothing, now is the time to come out of denial. It’s time to do some serious soul searching. How did you get in this mess? Did you lose your job? Were you sick? Were you reckless with your finances? You need to get to the root of the problem if you want things to change.

Some people become paralyzed with fear and do nothing. Others falsely believe they will find a solution, win the lottery, or find a bag of money lying on the side of the road. Many people become so depressed about losing their home they are throw in the towel and walk away. This is a ridiculous thing to do. Foreclosure all but destroys credit ratings and remains on reports for ten long years.

Worse yet, mortgage lenders can issue deficiency judgments against borrowers for the difference between the loan balance and sale price. The judgment remains on credit reports until paid in full. For many people, this could be a lifetime. There is no reason to walk away from a home when options exist to protect your credit and dignity.

A mortgage short sale is an alternative to foreclosure. Find out what kind of short sale is offered by the bank. Some lenders accept the sale price as payment in full, while others hold borrowers responsible for any deficiency. This is known as a Deficiency Judgment and can cost a fortune.

Borrowers should do everything possible to obtain Payment in Full without Pursuit of Deficiency Judgment. Using this type of short sale agreement, lenders accept the sale price as payment in full. Payments in Full short sales are reflected on credit reports, but are not as damaging as foreclosure or deficiency judgments.

Author Bio: Author, Simon Volkov, provides details and share insider secrets regarding how to negotiate a mortgage short sale and how to write a short sale hardship letter in the “Short Sale Hardship Letter eBook Course” available at www.ShortSaleHardshipLetter.com.

Category: Real Estate
Keywords: mortgage short sale,short sale approval,loss mitigator,short sale hardship letter,foreclosure