What is a Short Sale?

In a Short Sale, a lender agrees to let a homeowner facing financial hardship sell a home for less than the amount of the mortgage owed. A Short Sale is an attractive alternative to foreclosure, and typically not pursued until after other efforts to keep the owner in the home have been exhausted. All Short Sales are subject to mortgage company approval.
There are no guarantees a Short Sale will be approved or ever close, but when the process has been professionally handled by a realtor experienced with short sale transactions, preferably a CDPE ( A Certified Distressed Property Expert ), the chances of an approval are greatly increased.

HAFA Short Sale Program

The HAFA ( Home Affordable Foreclosure Assistance ) program is important because it's sponsored by the federal government, with the common goal of helping borrowers and an alternative way in avoiding foreclosure. A short sale or deed-in-lieu ( DIL ) is the best choice for both the lender and the borrower because the home will maintain it's value better when occupied, and the borrower gets to reduce their debt load. If you were not able to get your loan modified, this is the best option for you since a foreclosure or bankruptcy can affect your credit for 7-10 years. You may receive up to a $3000.00 incentive.

Loan Modification

While only certain homeowners will be able to take advantage of this alternative, it may be your best option because it keeps you in your home and typically results in the least damage to your credit. Your lender may be willing to modify the terms of the loan, whether it's reducing the principal, lowering the interest rate of other creative strategies to make the loan affordable for you. As part of the stimulus package, the U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure.

Foreclosure ( Cash for Keys )

One of the biggest problems in foreclosures is that homeowners sometimes physically damage the property, or even sell some of the fixtures, before leaving. Needless to say, this is not a good idea. It may expose the homeowners to financial and legal liability. To prevent this, some lenders offer a program called "Cash for Keys." The homeowners receive a check for vacating the property within a certain time period and leaving it in good condition. If you have no alternative other than foreclosure, you should ask the bank about this option.