Homeowner Wants to short sale home before forclosure

I onw a home in Orlando, FL. I will probably be in forclosure in three to four months. I was interested in finding about a short sale and what credit reporting situation that puts me in.
I did not make my mortgage for first time this month. How long will I have.
I have two mortgages 245 and 60k approximately. I owe what the house last appraised at and taxes will come due.
The home needs some repairs and remodeling.
What credit situation will that put me in to do a short sale and will I still owe the difference.
My credit is perfect well over 700 score but I cant afford the house anymore. I screwed up you know.
Also, How do I locate people who would be interested in buying the house on a short sale.

Good Morning guy in Orlando,

Banks really wont even consider you a candidate to shortsale until you are a couple months behind in payments. You havent really proven to them you are going through financial hardship when you have just missed your first payment. See what kind of payment plan your lender will work out with you. This will give you some time to sell the home

Frankly, your credit is going to be screwed as you continue to miss your mortgage payments.

You can find investors in your area by looking for ads in the real estate section that say things like we buy ugly homes, we pay cash and the like.

Good luck,


I don’t want to really stay in the house or work out payment plans. The house isnt worth what I owe in this market and houses are sitting for 6 months+ for sale. I was planning forclosure so I guess missed payments wont kill me. Can they get a deficiency judgement on the difference between short sale and owed amount.
Thanks For the info.

The Lender has a right to file a deficiency judgement against you for their shortfall resulting from the short sale. Be sure to tell the Investor, that you are working with on the SS, to make the short sale offer to the Lender contingent upon the Lender waiving their right to file a deficiency judgement. The Lenders don’t always agree but it doesn’t hurt to try.

Also, they most likely will file a 1099 at the end of the tax year, claiming that you earned the difference as income, which offsets their loss. Sometimes they simply forget, however, expect it to happen.

In answer to your question about finding an Investor… my guess is that your REIclub post will set the wheels in motion. I would jump all over it, however, I prefer to stay close to home, in the North Atlanta area.

Good luck.

Sorry to hear about your situation. I’m in Pasco County and may be able to help you out… I need to know a little more about the specifics. Don’t get bummed out; there is still time to get things done. By the way, your not “late” on your payment until its 30 days past due. The previous advice was right on…contact your bank and see if you can get a forbearance. Also, ask them not to report you to the credit bureau; its the creditors choice, not duty. Also, don’t tell them that you want to “bail”, just tell them that you had a temporary setback that you have corrected. Contact me and I will help you through this.

hi Verpro and others,
this is great info.
What is a forebearance ?
What kind of temporary setback are acceptable to the lender?


Hey lovetoknow,
You gotta know 2 things about Banks:

  1. They want their money.
  2. They don’t want houses.
    If you can “give” them these 2 things, they will be happy.
    A forbearance would be when they allow you to make your current
    “on time” payments and an extra partial payments to make up the arrears. A modification would be where they would take the arrears and “add” it to the end of the note, extending the maturity date. They can also modify the interest rate or other terms of the note.
    As far as what kind of reasons for the missed payments… anything that you can effectively persuade them about… car accident, sick, laid off but working again, family situation, etc. There is always “something”, but make sure that it is verifiable. And present your case with passion. Real Estate is all about persuasion.

Your comments are very sensible!
Is a forbearance acceptable by most of lenders ?
How do you help homeowners who have no equity in their home and are in foreclosure ?
For short sale to work, does one has to try to sell the house and then submit the package ? If the person owns 2 houses, can he short sale one without losing the 2nd home ?

thanks for your advice

The following foreclosure options were taken from the HSBC website at http://www.us.hsbc.com/1/2/3/personal/home-loans/mortgage/existing/when-payment-difficulties-arise#hardship and will shed some light on the entire arena of available HO options, when experiencing mortgage payment problems.

What are the options?:
It is important to note that the Workout Options available to you may be limited dependent on the following factors:

the type of loan that you have
which investor holds your note, and
which mortgage insurance company insures your loan (if you carry mortgage insurance on your loan).

Retention Options are workout plans that can help you keep your property. These options are usually considered after you overcome the hardship that resulted in default on your loan. You might now have the ability to resume making regular monthly mortgage payments, but be unable to come up with the total amount past due. The following options are considered Retention Workout Options:

Special Forbearance/Forbearance Agreement:
A formal, written agreement between you and HSBC to reduce or suspend monthly payments for a pre-determined period of time. This will give you the opportunity to recover from your hardship. At the end of this time period we will review for further options to bring the account current.

Repayment Plan:
A formal, written agreement between you and HSBC in which we accept your regular mortgage payment and a portion of your arrears for a pre-determined period of time. These plans are designed to bring the account current over a period of time and avoid the initiation of foreclosure.

Stipulation Agreement:
A formal, written repayment agreement between you and HSBC to bring the account current after a foreclosure action has begun. The plan suspends the foreclosure action and is designed to bring the account current. The plan payments consist of your regular mortgage payment plus a portion of the arrears each month for a pre-determined period of time. These plans are designed to bring your account current over time. The foreclosure action would be cancelled if the plan were successfully completed.

Loan Modification:
A program in which a portion of the arrears may be added to your remaining principle balance, to bring the account current. It may also be possible to adjust the term of your loan and/or reduce your interest rate.

Claim Advance:
(FHA loans or Conventional loans with Private Mortgage Insurance) These plans allow for arrears to be cured by advances made by the insurer of your loan. The funds advanced by the insurer are used to bring your account current and you (as the homeowner) are obligated to repay the funds advanced. You may be required to sign a promissory note to repay the insurer through monthly installments or in one lump sum at a pre-determined time. On FHA loans this option would require an additional lien to be placed on the property.

Liquidation Options are workout plans that allow you to transfer ownership to the lender or to a third party for less than a full payoff. These options may be considered if you have suffered a hardship, are unable to financially recover, and have insufficient equity to sell your property and pay off the loan in full. The following options are considered Liquidation Workout Options:

Pre-Foreclosure Sale/Short Sale:
If your property value is not sufficient to pay the loan in full, HSBC may be able to accept less than the full amount owed. Sale proceeds are accepted as settlement for the debt. You may or may not be required to sign a promissory note for the difference or a portion of the difference.

Discounted Payoff:
This option allows you to retain the ownership of the property in return for proceeds that may not be sufficient to pay your loan off in full.

Deed-in-Lieu of Foreclosure:
This option allows you upon approval to deed your property to HSBC, the investor, or insurer as settlement in lieu of foreclosure. Property must be free of all other liens.

Thanks for the info. I will get in touch with you by email. I havent had a temporary setback although I will tell them that. I am done. Gone through all the savings to make the payments. I had a really bad pregnancy, no insurance and the baby is now a little over a month old. My husband left for active duty and although his income is about the same and he is not on the loan so we dont qualify for soldiers relief. I am looking at about $500 -600 in daycare and havent found a permanent position yet. I am certified to teach but didnt pursue a position earlier because the baby was due the second week of school. The daycare kills me and from what I am understanding he will be gone for at least a year.
Well I really woulnt mind people contacting me if they can facilitate a shortsale. Thanks

Your situation sounds to me like a hardship reason for the Lender to work with you to establish a resolution.

Fellow short sale investors in the Orlando area: Read this plea for help and get busy!

Also, you can contact your local real estate investment club to see if they can refer someone to work with you. I found this info on the net:


CFRI - Central FL Realty Investors
602 W. 27th St
Sanford, FL 32773
Phone: ((407) 328-7773
Fax: (407) 328-4446
E-mail: cfri@re-investors.com
Website: www.cfri.net

Best of luck to you and please let me know how it works out for you.

A short sale can be initiated when the mortgage is still current. Just have to show anticipated financial hardship.

I read your post and it seems that the lenders should seriously consider your situation. I realize that you have no interest in the house, but lets do things right so to minimize the effects on your credit. Your priorities are your family and your/their health. As long as your husband is onboard with your decision to find another place to live, I can give you some solutions. God bless you, your child and your husband, and many thanks to him for serving all of us!

It’s good to hear from a person of faith… Amen!

The only way to go!
We are all people of faith; just a question of what we have faith in.
I prefer good vs. evil, life vs. death blessings vs. curses. Seems pretty simple and basic to me. Whatever we give our attention to will grow. Think/give attention to solutions …get solutions. Think/give attention to the negative…get the negative. Its a natural law just like gravity. Apply this law to your real estate investing and prosper.

I’m with you 100%.