A Short Sale can be quite a liberating feeling when the walls are crashing in on you. It is a great solution for home owners who need to sell, and owe more on their homes than what they are worth.

Due to overwhelming market changes, banks and lenders have become much more negotiable when it comes to these transactions. Recent changes in corporate policy and the Obama administration have also improved the chances of getting a short sale approved. Such programs as the HAMP and the HAFFA program have been developed to help people in dire need of modification or the Short Sale process

HAMP: Housing Affordable Modification Program

1. Is your home your primary residence?
2. Is the amount you owe on your first mortgage equal to or less than $729,750?
3. Are you having trouble paying your mortgage?For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)?
4. Did you get your current mortgage before January 1, 2009?
5. Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) more than 31% of your current gross income?

If you answer yes to all of the questions above then you may be a candidate for the HAMP program. Additional information will be needed and only the servicer of your loan can tell you if you qualify. You will have to show that you have sufficient income to make the reduce monthly payments.

HAFA: Home Affordable Foreclosure Alternatives

Loan Eligibility Criteria for HAFA:

1. The loan must be secured by borrower’s principal residence (unless borrower had to relocate more than 100 miles away for employment reasons and have not purchased another property).
2. It must be a first lien mortgage originated prior to January 1, 2009.
3. The mortgage is delinquent or delinquency is reasonably foreseeable.
4. The unpaid principal balance is no more than $729,750, for a single-family residence (higher limits apply for 2-4 unit multi-family dwellings).
5. The borrower’s total monthly mortgage payment exceeds 31% of the borrower’s gross income.
6. After notification of potential HAFA eligibility, borrower has 14 days to ask for HAFA consideration.

But to be technical, here’s a more official definition:

* A homeowner is ‘short’ when the amount owed on his/her property is higher than current market value.
* A short sale occurs when a negotiation is entered into with the homeowner’s mortgage company (or companies) to accept less than the full balance of the loan at closing. A buyer closes on the property, and the property is then ‘sold short’ of the total value of the mortgage.

For homeowners to qualify for a short sale, they must fall into any or all of the following circumstances:

* Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
* Monthly Income Shortfall – In other words: “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
* Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

If you have questions or feel you may qualify for a short sale, please contact Jose Lamboglia or one of our My Az Short Sale Team member for a free consultation.

Understanding your options now could mean all the difference in the world.

Jose Lamboglia