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MN Short Sales
What happens when you are upside down on your MN property and you can no longer keep up with the payments? Chances are that a short sale may be your ticket out of that piece of real estate. We have been closing short sales since 2007 with great success. The transaction known as a short sale was once a seldom used term in the real estate sector. The process has been greatly demystified over the past two years as the prevalence of short sale transactions has skyrocketed.
What is a Short Sale?
The term short sale has nothing to do with a measurement of time. Rather, the term was coined for the process of selling a property for less than what it owed to a lender – thereby “shorting” the lender as a result of the sale. Of course, the lender has to agree to accept a loss before a short sale approval is issued. If you have multiple loans on the property and/or mortgage insurance the short sale process gets more complicated. Each loan will have to be approved by the lender and also the lender’s investor. If you add mortgage insurance company into the mix you now have three parties involved for one short sale approval. It is important to understand that this is even before the terms are presented to the seller for the seller’s approval of the short sale.
The Short Sale Process
The short sale process used to be a daunting one, but efforts are being made to streamline the process.
Here is the traditional short sale process:
1. Seller is facing default and wants to avoid foreclosure.
2. Seller lists the property for sale with an agent.
3. Once an acceptable offer is received the offer as part of the short sale package are submitted to the lender.
4. The lender reviews the short sale package is received the lender performs a valuation of the property.
5. Once the valuation is received it is reviewed with the short sale package and submitted to the lender’s investor and mortgage insurer (if applicable).
6. Negotiation begins with all parties involved with the short sale approval.
7. Once terms are agreed to a short sale approval is issued and the buyer and seller are allowed to close the transaction.
Versus the new short sale process started with HAFA:
1. Seller is facing default and wants to avoid foreclosure.
2. Seller and agent submit a short sale package without an offer to the seller’s lender.
3. The lender performs a valuation on the property.
4. The lender “pre-approves” the short sale and sets the listing price.
5. Once an offer is received a request for short sale approval is submitted to the seller’s lender.
6. Once terms are agreed to a short sale approval is issued and the buyer and seller are allowed to close the transaction.
The main difference between the two short sale processes is the point of valuation. Traditionally, an offer must be received prior to the seller’s lender completing a valuation on the property. The main downside to this is that the seller’s lender can come back with a valuation much higher than the offer amount and/or market value after the offer is already received. Then all parties wait until terms can be reached (the buyer comes up in price or the seller’s lender allows a lower price). The new short sale process is designed to streamline the process by giving the seller and the listing agent a clear understanding of what terms will be accepted.
We have been around the block with short sales in
For more information please visit Short Sales in MN and our MN Foreclosures Blog.
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