Once you’ve determined that you have a hardship, you’ll want to know how to proceed with Short Sale. Many inexperienced Realtors will take the approach of putting the home on the market and fielding offers without first pre-qualifying the seller and determining the appropriate Short Sale program that they fit into. This is wrong-headed and counter-productive.
The mortgage servicer, or bank that you pay your mortgage bill to, does not determine the type of Short Sale program. Rather, it is the investor of the loan – the actual owner of the mortgage note – that sets the program guidelines.
For example: The two largest investors of U.S. residential mortgages are Fannie Mae and Freddie Mac. Both Fannie and Freddie have their own Short Sale program guidelines, which are very similar. While you will not work directly with Fannie or Freddie on your Short Sale, your servicer will, and ultimately Fannie or Freddie will decide to approve or reject your Short Sale request.
The same goes for FHA loans. FHA loans are owned by the Department of Housing and Urban Development (HUD). FHA Short Sales are governed by the HUD Pre-foreclosure Sale program guidelines. While your servicer will handle your application for this Short Sale program, HUD will have final say over the approval.
These are just a few examples of the type of Short Sale program a borrower may be eligible for. It is important to determine your Short Sale program proactively, rather than react after you have an offer that may not conform to your loan’s short sale guidelines. An experienced Short Sale Realtors can size up your loan type and qualify you for the correct program in a few minutes so you know what path you should be traveling on.