If the market value of your home is less than what you owe on your current mortgage, you may qualify for a legal, lender-approved solution known as the Short Sale. It is no secret that the US economy and housing market leave much to be desired for any homeowner looking to potentially sell. House prices and values are falling faster than space debris, and buyers have the upper-hand in any bargaining agreement. What makes matters worse is that many real estate agents have been knocked flat on their backs, helplessly waiting for a “deus ex machina” moment to save them from years of irresponsibility. The current housing market climate may not favor the seller, but there is a way to relieve yourself of some debt through the market. If the market value of your home is less than what you owe on your current mortgage, you may qualify for a legal, lender-approved solution known as the Short Sale. The short sale of real estate is no longer a questionable practice in today’s softening real estate market, but a necessity. It is a form of agreement between the seller of the home in the beginning stages of foreclosure and the lender, allowing the home to be sold for less than the existing loan balance. The mortgagee accepts less than the loan amount in order to avoid foreclosure. This short sale will result in a substantially discounted price for any buyer. The purchase would then proceed much the same as any conventional home transaction. You should allow a window of no more than 60 days after the foreclosure notice to proceed with a lender approved short sale. The documents necessary to proceed with a short sale will depend on the lender. Typically, a lender will require a hardship letter detailing the circumstances involved in the short sale. Other documents that a lender may need are a signed purchase and sales contract, full appraisal, HUD-1 settlement statement, and a preliminary estimate. There may be some additional documents that offer more detail into the financial condition of the seller: pay check stubs, bank statements, budget assessments, etc. The seller’s credit rating will be affected by the short sale. The good news is that the loan will be marked as “paid” on the seller’s credit report, but it will be notes as “settled for less than originally owed” or something to that effect. However, it is advantageous for anyone’s credit score to have short sale referenced, rather than a foreclosure. If the seller is in bankruptcy or in the middle of the proceedings, the lender will not consider a short sale. Negotiating a short sale is considered a collection activity and therefore is prohibited in bankruptcy. A short sale will always represent a loss for the lender and seller. A lender can report the amount lost as a debt forgiveness for the seller. If the seller files a formal tax form 1099, they may be responsible for paying taxes on the amount of debt forgiveness. Short Sales provide an excellent, win-win solution for all parties involved. The homeowner is relieved of the home they cannot afford. The lender avoids costly foreclosure proceedings and the buyer purchases a house at an affordable price. It is an attractive alternative for any homeowner needing to get out of debt in the midst of a global recession. Short Sales Solutions provides a resource for short sale education through the necessary tools, guidance and support that ensures agents are equipped to properly educate and represent their sellers through the challenges of the current real estate market. Ethan Luke. ShortSaleSolutions.biz is the resource for all of your Short Sales needs.