• Short Sale Frequently Asked Questions

    • What is a short sale?
      A "short sale" is specifically designed to help borrowers who are unable to afford their first mortgage and want to sell their home to avoid foreclosure, even if the sale price may not pay off the amount owed on their mortgage. A short sale requires a number of parties (the borrower, the buyer, the borrower's real estate broker, and sometimes mortgage insurance companies and other lenders) to work together to make this option successful.
    • How Does a Short Sale Work?
      • Pre-Sale - We will start by approving a list price for your home or give you the acceptable sale proceeds (the minimum amount that we must receive after sales costs) from the sale of your home. We will also identify the sales costs (broker commissions and closing costs) that may be deducted from the final sales price. You then list your property (like any home sale) with a local real estate broker at the approved price.

      • Offer - When you get an offer on your home, you will submit the required documentation and we will approve the sale if it is in line with what we agreed to.

      • Closing - Once the sale closes, we will release you from all responsibilities for repaying your mortgage.
    • How do I participate in the Short Sale Program?
      In order to determine if you qualify, you will need to submit the short sale packet. Once you submit a completed packet, we will order an interior inspection of your property and review your loan for eligibility.
    • What are my responsibilities if I qualify for this program?

      You have 120 days to sell your house once you accept the offer. During that time you have certain responsibilities.

      You must:

      • Keep your house and your property in good condition and repair and cooperate with your broker to show it to potential buyers.

      • Be able to provide the buyer of your home with clear title. To start, determine if you have other loans, judgments or liens secured by your home, such as a home equity line of credit or a second mortgage. If there are such liens, you will need to either pay these loans off in full or negotiate with the lien holders to release them before the closing date. Under this program, you must make sure other lien holders will agree not to pursue other legal action related to the pay off of their lien, such as a deficiency judgment. You can get help from your broker to negotiate with the other lien holders.

      • At several stages of the short sale process, such as after an offer is received, you will need to complete some paperwork. You are responsible for returning all documents within the time allowed in this Agreement. 

      If you fulfill these responsibilities, we will postpone any foreclosure sale during the period of the Agreement.

    • What additional information do I need to know about this program?
      You can't list the property with or sell it to anyone that you are related to or have a close personal or business relationship with. In legal language, it must be an "arm's length transaction." If you have a real estate license, you can't earn a commission by listing your own property. You may not have any agreements to receive a portion of the commission or the sales price after closing. Any buyer of your property must agree to not sell the home within 90 calendar days of the date it is sold by you. You may not have any expectation that you will be able to buy or rent your house back after the closing. Any knowing violation of the arm's length transaction prohibition may be a violation of federal law.  

      We will need to talk to your broker and others involved in the sale. By signing this Agreement, you are authorizing us to communicate and share personal financial information about your mortgage, credit history, subordinate liens, and plans for relocation with your broker and other third parties that could be involved in the transaction including employees of the United States Treasury and its financial agents, Fannie Mae and Freddie Mac.  

      The difference between the remaining amount of principal you owe and the amount that we receive from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C, as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The amount we pay you for moving expenses may also be reported as income. We suggest that you contact the IRS or your tax preparer to determine if you may have any tax liability.  

      We will follow standard industry practice and report to the major credit reporting agencies that your mortgage was settled for less than the full payment. We have no control over, or responsibility for the impact of this report on your credit score. To learn more about the potential impact of a short sale on your credit, you may want to go to http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm .
    • What happens once I accept an offer on my house?
      When you receive an offer on your home, you will send us a Request to Approve a Short Sale (RASS) form. You will also need to send along a copy of the signed purchase offer and evidence that the buyer has funds to purchase the home, such as a letter that the buyer is approved for a mortgage loan. Within 10 business days of our receipt of these documents, we will approve the sale if it is within the terms and conditions of the Agreement and any other liens are released. 

      When the sale closes in accordance with the Agreement, we will accept the net sale proceeds (all the funds that remain after the approved sales costs have been paid) in full satisfaction of your mortgage with us and will release you from all future liability.

      If you or your broker have any questions about short sales, please call us at 1-800-781-7399.