Here is the basic information about a Short-Sale:
What is a Short-Sale? Do all banks call it a “Short-Sale”?
A “Short-Sale” is where the bank is taking a lesser-amount than what is due. Most banks understand what a Short-Sale is by name, but other names that the banks might use are, Compromise, Offer & Compromise, and most Lenders will make you go through the “Loss-Mitigation” Department to get the Short-Sale approved. It’s like buying a Mortgage, except for a few changes. You are NOT buying a mortgage, but “paying it off”. You are asking the bank to accept less than the full amount due, and then to release the Mortgage. Your offer is similar, you’ll get an agreement from the bank (similar to buying a Mortgage) and you’ll wire funds to the bank like you were buying a Mortgage. The biggest difference is that the loan is just paid-off, and the Mortgage is released.
Obviously you would never want to do this, unless you either:
- Have the Deed to the property in your name, or
- Have the Home Owner in your ‘back-pocket’, in such a way that you can get the owner to sign new loan papers.
Is doing a Short-Sale the same thing as buying a Mortgage?
No. The biggest difference is when you buy a Note/Mortgage, you will receive the original Note & Mortgage, along with an Assignment (which assigns the Note from the bank to you, as the new note holder). If you are doing a Short-Sale, the money you give the bank pays off the loan and the bank is releasing the mortgage as if paid in full. So know this one rule, Never give the bank money for a Short-Sale until you have a Deed from the owner, or a new mortgage signed and recorded.
What are all the Different Departments at Banks that I can work with either a Note-Purchase or a Short-Sale?
Loss Mitigation Department
Legal Department (very few Banks have a legal department, but those that do, handle many of
What are the best departments to work with at the Banks?
Banks & Lenders work their ‘non-performing’ Notes in many ways. Some banks allow each department to make their own decisions. Others send most ‘discounted’ actions (Note-Buying or Short-Sales) to the Loss Mitigation Department. And yet, there are still some Lenders that don’t even have a “Loss Mitigation” Department. The best advice is to simple ask “who” is working this specific file, and to ask them if they would handle the Note Purchase/Short-Sale or is it handled by another department. About half the Banks will have work through the Loss Mitigation or Foreclosure Department.
Is doing a Short-Sale hard?
In the beginning, the answer is Yes (until you understand how the system works, and you get to the point where getting everything accomplished to complete a Short-Sale is just a routine, and not a major event in your life. Once you’ve completed the steps a few times, you’ll see that the long-term answer is No.