What If You Can't Make Your Mortgage Payments?

by Enrique J. Fernandez, Esq.  DREIA Business Member  [email protected]

In my last series of emails I discussed many ways to try and lower your mortgage payment. What happens, though, if you are unable to lower your mortgage payments? What happens if you can’t make your mortgage payments? In my next series of emails I will discuss strategies to get out of a property you are no longer willing or able to make payments on. Today, we will be discussing short sales.

A short sale is a transaction where a lender allows a property owner to sell the property and provide the bank with a “short” payoff. So, if your property is worth $100,000.00 but you have a mortgage of $150,00.00 the lender would have to agree to a payoff of less than $150,000.00 for a release of their mortgage. In fact, they would have to accept less than $100,000.00 in order to cover the closing costs involved with selling the property. Traditionally, the seller of the property in a short sale does not have to pay anything at closing in order to complete the transaction. In fact, there are many programs that now provide relocation assistance to the seller in the form of cash from closing.

While short sales provide many benefits to the seller, a short sale is not easy and they are not guaranteed. They are essentially a negotiated settlement between the lender and the property owner. As with any negotiation it is very important to understand what you are agreeing to. Contrary to popular belief a short sale does not automatically result in the lender waiving the difference between the proceeds from the sale and what they are owed. You must be sure such language is included in the short sale terms. Further, in order to complete a short sale, the seller or their agent must work very closely with the lender and keep the lines of communication open. These are very labor intensive sales. I recommend anyone considering a short sale contact an attorney in order to discuss such sales.

Our office represents individuals applying for short sales and we have a track record of success. So, if you or anyone you know would like to discuss the possibility of a short sale please give us a call at 305-226-4529 for a free consultation. Be sure to mention this newsletter, as we normally charge a $100 fee for such consultations.

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