If the short sale is approved, explain the following possible outcomes to the seller:
– All liens will be released, in full satisfaction of mortgage with no conditions.
– Full satisfaction of mortgage with a small or large amount of contribution from the seller.
– Full satisfaction of mortgage with an unsecured promissory note executed between seller and lender, with seller’s cash contribution at closing.
– Full satisfaction of mortgage with an unsecured promissory note executed between seller and lender, without cash contribution from any party at closing.
– Release of lien with mortgage reporting of less than full pay off.
– Release of lien with an unsecured promissory note, with payment less than full reported
– Release of lien with default judgment to be paid over time
If the homeowner’s loan modification has been disapproved, find out why. The same reasons will help you in your short sale negotiations. It is most likely that they have been disapproved with loan modification for insufficient income or they no longer live in the house. If they do not make enough income to qualify for a loan with lower interest rates and lower values, then they will not be able to continue making payments for their mortgage. The homeowner should include this in the hardship letter and you as an agent should include this in your cover lender to the lender. Also, include the loan modification rejection letter in the short sale package.
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Please seek legal advice. This information is for informational purposes only.