The most common is a shortsale. A shortsale is basically where your lender allows you to sell your home for less then you owe on it. They sometimes forgive the deficiency and sometimes they do not. The best news about the shortsale is that it will stop the foreclosure process and the annoying phone calls. It will give you a little peace of mind because you know that you won’t come home to changed locks.
There is alot more to it then that of course. You must qualify for a shortsale. Your lender will eventually want two years tax returns, two months bank statements, a hardship letter detailing how you got behind, a financial worksheet that clearly shows what your monthly bills are, and typically some other in-house forms that vary from lender to lender.
First your lender will ask for the home to be listed for sale as a shortsale and most of the time they will not initiate the shortsale without having an offer in hand. The listing agreement details that the sale is subject to lender approval. You will sign the real estate contract once there is an offer, but the lender will then decide if the sale can occur or not. They will appraise the value of the home to make sure the home is at or slightly below market value. They do not want to lose anymore money on the deal then they have to, but they do not want the house to be abandoned in the middle of the night either. They will review all your financial information and make sure that you qualify for the shortsale. The Buyer must be arms length meaning you cannot sell the home to family or a friend. The process can take just a few months or can last for close to a year. I have closed shortsales in six weeks and I have had them take six months.
Take a look at my post about HAMP (Home Affordable Modification Program) it details a loan modification http://wp.me/p1NH1r-4O . This would be your first course of action. If the loan can be modified then that would be preferred by the bank if not all parties. Then take a look at my post about HAFA (Home Affordable Foreclosure Alternatives) it details options like shortsales and deed-in lieu of foreclosure http://wp.me/p1NH1r-4I .
I am an experienced shortsale agent. Call or email me and we can meet to discuss your options and answer your questions. My number is 479-640-8375 and my email address is [email protected].