The initial step in order for a real estate short sale to take place is getting the permission from your lender in order to sell the property for an amount less than what remains on the note. There are several things that will be required from you such as a letter explaining your financial situation, financial records, and various other forms of documentation. Short sales are not fast! It can take quite some time before the lender will even agree on a short sale price. Negotiations can take up to a year if the lender feels they could get more from the house on the market. In some situations, the lender may require you to put the home up on the market first to see if it will sell prior to agreeing to short sale. The lender will look at other options before a short sale because the lender can lose thousands of dollars on a short sale.

If a lender agrees to a short sale, the homeowner may still owe the lender the difference between the amount of the loan and the amount that the property is sold for so it is important to know what you are agreeing to before signing anything on the dotted line. It may still be a better option than foreclosure but will be dependent upon how much the difference is. Foreclosure and short sales affect your credit report score as well as your ability to buy a new home for several years, however a short sale will cause less damage than a foreclosure. If you are facing foreclosure, the best thing you can do for yourself and your credit is to find out all your options in avoiding foreclosure. Let 1st Foreclosure Prevention give you a free consultation to assist you in making an educated decision for the sake of your future.

A couple things to keep in mind as well is to make sure your letter is concise and to the point. Face it, there are thousand upon thousands facing foreclosure or close to it who are also trying to get some sort of consideration from their lender in preventing the foreclosure of their home as well. Keep it to no more than two pages and present it in typed print. If you do not have a computer or typewriter handy, find someone who is willing to type it up for you. Double-check your grammar and spelling.

The letter should present in a chronological order outlining the life issues that has affected your ability to meet your financial obligations. Hardships that lenders will take into consideration when considering or working out a loan modification are:
• Adjustable Rate Mortgage Reset- Payment Stock
• Illness
• Loss of Job
• Cut back on work hours (reduced income) due to downsizing
• Failed Business
• Job Relocation
• Death of Spouse or Co-Borrower
• Death
• Incarceration
• Divorce or Marital Separation
• Military Duty
• Medical Bills
• Damage to Property (natural disaster or unnatural)
Again, I stress, it is important that you are honest in what brought you to the current situation and can be reviewed stringently. Although the hardship letter is just one of the many steps involved in working out a loan modification, it can be the deciding factor in avoiding foreclosure.