If you're behind on your mortgage payments, rest assured you're not alone. Right now, millions of Americans face the same challenge and are seeking the best solution. And contrary to what you may believe or have heard, foreclosure isn't the only answer--even if you've already received a foreclosure warning letter from your mortgage lender's attorney.
Every state has a different set of rules that govern the timetable for foreclosures, but you may still have time to work out a solution. One of them is called a short sale, and it just may be the relief you seek. If you've heard of short sales before--but also heard how difficult they can be, don't let that deter you. Short sales aren't what they used to be. Gone is the long and complex process that failed as often as not. Today, mortgage lenders--along with the federal government--have streamlined the short sale process to make it them more efficient.
So, what is a short sale?
It's a process in which the mortgage lender allows your property to be sold for less than the remaining principal balance on the loan. Short sales can be the answer for homeowners who can no longer afford their mortgage payments. And if you participate, you may be eligible for a lump sum payment for relocation assistance. Most lenders offer short sale incentives, so you should check with your specific lender to find out what programs they offer. The amount of the lump-sum payout varies by program, individual circumstances and loan characteristics. The incentive is typically paid when the short sale is completed.
5 Critical Factors to Consider
As you begin evaluating if a short sale is right for you, answer these five questions and you'll be well on your way to knowing if a short sale is a good choice for you.
1. Have you talked to all your mortgage lien(s) holders? All of the lien holders on your property must approve the short sale. If you have a second lien holder, you will need to not only get approval from your first mortgage lien holder but also the second lien holder.
2. Do your lien holder(s), real estate agent and new buyer agree on the property's value? What contingencies are in place if they don't?
3. What documentation will be required? The transaction will require a number of documents such as a Letter of Authorization, Listing Agreement, Purchase Contract, Estimated/Final HUD 1 Settlement Statement and Subordinate Lien Approval Letter(s). In addition, you will also be asked to provide a payoff for any subordinate lien(s), hardship documentation and financial information such as pay stubs, tax returns and bank statements.
4. How long will it take? Generally you can expect the approval to closing process to take around 30 - 45 days. However, the process can take longer. For example, the process can be slowed by extensive negotiations between parties or obtaining subordinate lien holder approval(s).
5. Will a short sale affect my credit? Yes, a short sale can impact your credit. For example, your mortgage lender will report the short sale as to credit reporting agencies as "paid in full for less than full balance" or something similar. For more information about credit scores visit the Federal Trade Commission Consumer Protection website (ftc.gov). Additionally, there could be tax consequences; ask your tax advisor to be sure.
Like to learn more?
The last thing your mortgage lender wants to do is foreclose on your home. That doesn't benefit anyone, but the further behind you get on your payments, the fewer options you'll have to work it out. The best thing to do if you're behind is to act immediately.
In addition to a short sale, you may have other options as well, such as a deed-in-lieu of foreclosure, partial claim, mortgage modification plans, repayment plans and deferment plans. The Citi Mortgage Homeowner Assistance Team will walk you through your options and help you decide which one will work for you best.
If you're a Citi Mortgage customer, call the Citi Mortgage Homeowner Assistance Team at 1-866-272-4749. The hours are Monday - Friday, 7 am to 11 pm; Saturday and Sunday from 7 am to 7 pm. All times are Central.
I have a client that sold his home 5 years ago on a real estate contract. The original buyer walked away from it and my client needs to now sell the house. He cannot afford to carry the house empty and cannot rent it. It is unfortunately worth about $XXX less than what the mortgages are ($XXX Citimortgage loan). Would the bank consider a short sale without it being his primary residence? It needs to be sold but the list price would have to be at least $XXX lower than the loan balance owed.
Reply to this comment by Sara on 02/19/2012
That may be a possibility, but it depends on a number of factors such as who the loan investor is on the loan. I've forwarded your information to someone that can assist.
Reply to this comment by CitiMortgage on 03/19/2012 in response to Sara
What factors go into Citimortgage deciding on whether to accept a short sale offer or to take a deed in lieu? Background: We put what we believe a reasonable offer in on a home based on similar sales and poor condition of the home but were told that the bank was going the deed in lieu route without even countering our offer. The property has been on the market for well over a year, is in need of a roof and additional maintenance, and also has unconvential heat (wood/electric) amongst other problems. And it will now be sitting vacant during the winter months for an undetermined amount of time. We do know that an appraisal or/BPO that was recieved is excessively high for the market. Any information would be appreciated so we understand the decision process. Also, what happens and what is the timeline after a DIL agreement is finalized. Thanks for your time and assistance.
Reply to this comment by Lori on 12/20/2011
Hi Lori. Thank you for the question. There are a number of considerations that go into such decisions. In most cases the decision maker is not Citi, but instead the loan investor. I have forwarded your comment and email to one of our managers. Someone will be in touch with you soon.
Reply to this comment by CitiMortgage on 01/11/2012 in response to Lori
I am the buyers agent for a short sale property with the lean holder being CitiMortgage. We wrote the contract in June along with 3 other parties. The bank supposedly asked the listing agent to get the highest and best of the 4 offers on the table - ours won! It is now been 5 months and we are still waiting for 3rd Party Approval, I don't understand what is taking so long?? One would think that the bank would like to get these homes off their books before the end of the year. I know that I can't speak with anyone since I am not the listing agent but this process has been sooooo frustrating!
Reply to this comment by Angela on 12/02/2011
Hi Angela. Thank you for the post. I've forwarded your comment and email so someone can contact you directly. I can't speak specifically this approval, but if the loan is owned by an investor the request must be approved by that investor. Once Citi submits the request to the investor, we must wait to receive the investor's approval before proceeding.
Reply to this comment by CitiMortgage on 12/19/2011 in response to Angela
We have submitted a back-up offer on a property under a short sale with Citi. The Seller's broker seems dis-interested in presenting our offer to Citi, saying she doesn't want to 'confuse' the bank. Isn't Citi interested in getting the best offer it can under these circumstances? How can we get our offer considered?
Reply to this comment by Paul on 11/28/2011
Thank you for the post. I've forwarded your email address and comment to one of our managers. Someone will be in touch very soon.
Reply to this comment by CitiMortgage on 12/19/2011 in response to Paul
How do I find out if Citimortgage is the lender of my mortgage or just servicing it?
Also there is a realtor saying Citimortgage is paying $12,000 for relocation expenses to short sale your home in Massachusetts. Is that true? Thanks for responding.
Reply to this comment by Rhonda on 11/21/2011
Thank you for the post. A short sale can be the answer for homeowners who can no longer afford their mortgage payments. And in some cases, if you participate you may be eligible for a lump sum payment for relocation assistance. The amount of the lump-sum payout varies by program, individual circumstances and loan characteristics. The incentive is typically paid when the short sale is completed. I've forwarded your email and question to our Homeowner Support team so they can determine if you are a Citi customer. Someone will contact you soon.
Reply to this comment by CitiMortgage on 11/23/2011 in response to Rhonda