Homeowners need to know about the problems related to short sale deficiency prior to pursuing short sale for their home to avoid losing the home in foreclosure.  Short sales are commonly used to prevent homes from being lost to foreclosure.  When the homeowner’s lender allows a short sale, they are agreeing to accept less money from the sale of the homeowner’s property than the homeowner owes for their mortgage.  The amount that is left after the short sale is called the deficiency.  Lenders have two options for how they can handle the deficiency.  Lenders can, and often do, forgive the deficiency.  This leaves the former homeowner with no financial responsibilities related to the property mortgage.  The concern is that lenders do not always forgive short sale deficiency.  Lenders may choose to pursue deficiency judgments against former homeowners to collect the amount that was not covered by the sale of the former homeowner’s property.

Lenders pursue short sale deficiency judgments when they feel the loss they have taken on the short sale was too large and that the former homeowner has the ability to pay the deficiency amount.  If the lender is granted the judgment by the courts, the former homeowner’s wages will be garnished until the judgment is paid in full.

Homeowners can minimize the likelihood that their lenders will pursue short sale deficiency judgments.  The worst thing for a homeowner to realize is that they have signed a promissory note.  A signed promissory note is an agreement, which lenders often require to approve short sales, between the homeowner and the lender that the homeowner will repay the short sale deficiency.  A lender who has a signed promissory note will have no trouble getting a judgment against the former homeowner for the deficiency.  If this situation arises, the homeowner needs to consult with an attorney to determine how and if, a deficiency judgment can be avoided.

Homeowners can also learn about the laws related to deficiency judgments.  This information can be obtained from the homeowner’s attorney as well as from online sources for their state.  Homeowners need to know, specifically, what the rules are in their state.  The state laws vary from one to the next.  In some states, it is legal for lenders to pursue short sale deficiency judgments, other states restrict the amount that can be pursued and many do not allow deficiency judgments at all.

Having an effective negotiator, either an attorney or other professional negotiator, can at least minimize the damage.  The negotiator may be able to convince the lender to either discount the balance of the loan or waive the differential.

Despite the possibilities of deficiency judgments or credit and tax repercussions, short sale may be the best way for a homeowner to avoid losing their property to foreclosure.  It is a difficult position to be in, and a hard choice for many homeowners to make.  Ignoring the situation is not an option so homeowners need to look at their choices and make informed decisions to find relief from the financial difficulty they are suffering.

Losing a home in foreclosure is a very discouraging situation.  As bad as that seems, homeowners in a financial situation that may require short sale or foreclosure may find that the nightmare does not end with the short sale or foreclosure.  Both of these processes leave a deficiency.  The deficiency is the amount of the mortgage that remains after the property has been sold either by the seller through short sale or by the lender as a foreclosure.  Lenders can pursue a short sale deficiency judgment or a foreclosure deficiency judgment against a former homeowner to force repayment of the remaining balance of the mortgage.  This can be done unexpectedly, any time after the short sale or foreclosure has been completed.

The possibility that a former homeowner will be pursued for a short sale deficiency judgment increases if the former homeowner had a secondary mortgage or any other liens against their property.  It is also dependent on the location of the property.  There are states that do not allow short sale deficiency judgment such as Alaska, Arizona, California, Iowa, Montana, North Dakota, Oregon, Pennsylvania, South Carolina, Washington and Wisconsin.  This leaves a very long list of states that do allow these judgments.  Meaning many homeowners with financial difficulties need to be advised of the possibility that it could happen to them.

Lenders can and will forgive deficiencies in some cases, but for homeowners to take advantage of this possibility they need to request the lender to release them from responsibility for the deficiency.  If the homeowner does not ask for the release, the lender is not likely to offer one to the homeowner.  This is because lenders do not have to pursue the judgment immediately.  Lenders can wait until the former homeowners have recovered from their financial troubles and are doing well again before pursuing the judgments.  Some states, like Florida, allow as long as five years for the lenders to file for the judgments.  Once the judgment is granted, the lenders may have as long as 20 years in which to collect both the original deficiency amount and the interest on that amount.

It does not matter how large or small the deficiency is, lenders may choose to pursue judgments.  If they believe that the homeowner received approval for short sale without actually needing short sale, they are more likely to pursue a judgment.  Lenders are in business to make money, if homeowner’s are not able to pay their mortgage payments and require short sale or foreclosure the lenders lose money.  In order to minimize their losses; lenders will take whatever steps are necessary to recapture their money.

Homeowners need to be aware of these possibilities and prepare for them.  The best way to counteract the possibility of being pursued for short sale deficiency judgment is to learn the rules and ask the lender for the release.  If the sale is already completed, homeowners should seek legal advice to avoid the problems they may be facing now or in the next few years from completing their short sale.

Short sales are transactions where homes are sold at a lower amount than is owed on the mortgages for them.  The lenders take a loss on the mortgage amount and often forgive the remaining balance.  This process is useful in helping homeowners avoid losing their homes in foreclosure.  For a lender to accept this loss, the lender must believe the homeowner is suffering from real financial hardship.  Frequently, a lender will not consider a homeowner for short sale until the homeowner has an actual offer for the home.  Other lenders may approve the short sale prior to the homeowner listing the property for sale and then accept a reasonable offer for the property after the approval has been given.  Regardless of whether the lender gives short sale approval before or after an offer has been given for the property, the lender will require the homeowner to provide them with short sale documents prior to granting approval.

There are many short sale documents that may be required by various lenders.  Some of the documentation will probably vary from one lender to the next, other short sale documents will be standard no matter which lender is involved.

One of the most common, and most important, documents required by all lenders is the letter of financial hardship.  This letter is the homeowner’s case for short sale.  In the letter, the homeowner will detail the events that created their hardship and any methods they may have used to minimize or negate the damage caused by those events.  These letters should be well written and compelling to persuade the lender to grant their approval for short sale.  The information in the letter must be an honest accounting, as the homeowner will be required to prove the validity of their statements in the letter.

To prove the validity of the statements contained in the hardship letter, the lender will require financial documentation.  A financial hardship due to job loss could be proven with a termination letter from the homeowner’s former employer or information from the unemployment insurance division of their state’s department of labor.  A divorce decree or death certificate could be used as proof of income loss if the homeowner was recently divorced or if their spouse died and was a major contributor to the household finances.  Medical bills can be used to show significant increased expenses, and medical reports can show income loss due to the homeowner’s inability to work caused by illness or injury.

Additional documentation all lenders require is proof of income and assets.  This documentation usually consists of items like bank statements, pay stubs and tax returns.  Getting approval for short sale is much like getting a loan in reverse.  Instead of proving that the homeowner is capable of paying the mortgage, the homeowner is proving that they are incapable of paying the mortgage.

Lenders also need to have information related to the property itself.  They need to know what the fair market value of the property is, as well as anything that would detract from the value of the property.  This information can be provided by the homeowner after the homeowner has consulted with a Realtor and contractors.  The Realtor can give an estimate of the property value based on the listing and sale prices of similar properties in the area.  Contractors can provide the homeowner with estimates for any necessary repairs for the property.

Providing the lender with the required short sale documents will assist the homeowner out of their financial troubles by encouraging the lender to approve them for short sale.  Homeowners should consult with their accountant and their attorney to get information related to the possible tax, credit and legal repercussions of pursuing a short sale.

An underwater mortgage is a situation where the mortgage for a property is more that the value of the property.  Homeowners in this situation often look to short sales to remedy the problem when they are unable to afford their mortgage payments due to financial hardship.  Lenders will only approve short sale if the homeowner is suffering from financial hardship.  The homeowner must request the short sale and prove their hardship.  Even with the initiation of federal programs providing incentives to lenders, the lenders will still be reluctant to grant short sale approval because they will ultimately be losing money on their initial mortgage investment.

Homeowners need short sale education prior to pursing short sale.  There are some possible repercussions to being approved for these transactions.  The homeowner’s credit will be likely to suffer some damage from short sale, although it is typically less damage than is created when a home is lost to foreclosure.  The homeowner’s report usually shows a short sale the same way it would any other satisfied settlement.  The homeowner’s score will also suffer.  The number of points that the score will be reduced is dependent on whether the homeowner was late on mortgage payments prior to completing the short sale.  The more late payments prior to the short sale, the bigger the reduction in points on the credit score.  The short sale itself may cause a 60 to 100 point reduction in the homeowner’s score.

Homeowners who participate in short sale should be aware that they might not be eligible for a new mortgage for approximately two to three years after the completion of the transaction.  This is a relatively good piece of the short sale education, because homeowners who lose property in foreclosure usually have to wait up to seven years before regaining eligibility for a new mortgage.  There is an exception to the shorter waiting period of short sale instead of foreclosure.  The federal Freddie Mac and Fannie Mae mortgage programs view mortgage payments 120 days late the same way they see foreclosures, extending the waiting period for new mortgage eligibility for the homeowner who participated in short sale.

Quality short sale education for homeowners needs to include the possibility of any unpaid mortgage balances.  When a homeowner sells property as a short sale, there is a portion of the mortgage that remains unpaid.  This amount is known as a deficiency.  The homeowner’s lender may require the repayment of the deficiency by the homeowner or they may forgive the deficiency.  If the lender does forgive the deficiency, the homeowner may be responsible for claiming the amount on their tax return and paying taxes on the amount as if it was taxable earned income.  This is dependent on the homeowner’s individual situation and does not apply to all homeowners or all short sales, but the possibility is there and homeowner’s need to find out if it will have an effect on their transaction.

No short sale education could be complete without information related to the potential buyers.  The potential buyers can sometimes be the monkey wrench in the short sale process.  Often, homeowners will receive short sale approval, market the property and locate a potential buyer.  The potential buyer will place an offer on the property, the homeowner’s lender will approve the sale and the short sale goes to closing.  That is the way the process is supposed to work.  It does not always turn out that way.  Due to the length of time required to complete a short sale, many buyers lose patience, give up and retract their offers.  Sometimes potential buyers place offers and then their financing falls through leaving them unable to close on the deal.  To avoid these problems, homeowners need to advise potential buyers that the process can be very long.  Homeowners should also keep in close contact with their potential buyers, informing them of any developments and even talking to them when there are no new developments to report.  If the potential buyer feels like they have been forgotten, they will be more likely to retract their offer and look for a different property.  It is very important for homeowners to know that their potential buyer’s financing will not fall through.  The potential buyer can prove they have their financing in place with a pre-qualification document from their lender.

Even after receiving an offer on the property, it is a good idea for homeowners to leave the property listed and continue to accept offers as backups in case the deal they are working on falls through.  Having to restart the process could cost the homeowner time they cannot afford.

Homeowners who receive short sale education, prior to participating in short sale, have a much greater chance of completing their short sale without many of the hassles, delays and repercussions that are possible for these transactions.

Today there are many people who cannot afford the mortgage for their property.  These people have options, one of which is short sale.  Short sales are real estate transactions in which the property sells for less money than the seller owes for the mortgage.  The proceeds of the sale are applied to the mortgage balance and the lender is “shorted” the remainder of the mortgage that was not covered by the sale proceeds.  The short sale effect on credit is caused by this shortage.  If the lender were paid in full for the mortgage, the homeowner’s credit would look great.  Since the lender is basically accepting a settlement for less money than the full amount due, the homeowner’s credit will reflect that.

Lenders are typically allowed two options regarding the amount they have been shorted.  If the lender chooses to forgive the amount they were shorted, there would be no short sale effect on credit beyond showing as a satisfied settlement.  This is great news for the homeowner’s credit, but it may cause problems for the homeowner’s tax return.  Forgiven debts are usually seen by the IRS as taxable earned income, just as if the homeowner had received the money in a check from their employer.  This could cause the homeowner to have to pay taxes on the shorted amount, and may even raise the homeowner into a higher tax bracket increasing the amount of taxes they would need to pay on their entire return.  Before pursuing a short sale, homeowners should contact their accountant to see if this will be a problem in their situation, as this consequence does not apply to all short sales.  If the lender chooses to pursue a judgment against the former homeowner, the judgment will force the homeowner to repay the amount.  The judgment will also appear on the former homeowner’s credit in addition to the settlement.

To avoid any short sale effect on credit, homeowners can voluntarily repay the shorted amount if they have the financial means to do so.  One possibility is for the homeowner to pay the shorted amount in cash.  This would prevent any damage to their credit because the sale would then be reported as a mortgage that was paid in full.  Part of the payment came from the sale of the property, with the balance being paid by the former homeowner.  Another possibility is for the homeowner to take out a loan to repay the shorted amount.  Because this loan would be an unsecured loan, this option will only work if the homeowner has not already ruined their credit making it impossible for them to qualify for a loan.  Again, there would be no negative short sale effect on credit incurred by pursuing this option.  In fact, it would have a positive effect on the former homeowner’s credit because the mortgage would be paid in full, and the new loan would enhance the homeowner’s creditworthiness.

The short sale effect on credit can be even more substantial if the homeowner had late payments prior to the completion of the short sale.  Any late payments will cause damage to a credit report, whether there is a short sale involved or not.

No matter the situation, all homeowners in financial trouble, who are considering short sale, should consult with their accountant and their attorney prior to pursuing a short sale.

Homeowners may be concerned about how substantial short sale credit impact will be for them.  They may wonder if a foreclosure will have a smaller or a larger impact than the short sale credit impact would be.  Maybe the homeowners wonder about more like what other differences exist between short sale, deed in lieu of foreclosure and foreclosure, or even what those terms really mean and how they happen.

Short sales can only happen if the seller’s lender allows the property to sell for less than the amount owed on the property.  Some lenders will not agree to this, others will, but either way the seller should have a representative to handle the negotiations with their lender.  Having a Realtor, an investor or an attorney will allow the seller to take advantage of the experience and negotiating skills of these professionals.  For a seller to receive their lender’s approval for short sale, they will need to be able to prove that they are incapable of paying their mortgage through either income or assets.

Deed in lieu of foreclosure and foreclosure are basically the same thing.  The primary difference between the two is that deed in lieu of foreclosure is a voluntary surrender of the property and foreclosure is a forced surrender of the property.  If a homeowner has exhausted all other possible solutions, they can give the deed to the property to their lender and vacate the property or they can wait for their lender to force them to leave by filing for foreclosure through the legal system.  The deed in lieu of foreclosure would require the homeowner to vacate immediately while the foreclosure could buy the homeowner a few more months or even a year longer in their home due to the length of time involved for their lender to process the foreclosure.

Fair Isaac, the creators of the FICO scores, reports that the short sale credit impact is about the same as the impact created by deed in lieu of foreclosure or foreclosure.  The impact from bankruptcy is only a bit higher.  The point reductions for late payments depend on how late the payments are.  Payments that are 30 days past due will cost between 40 and 110 points, while payments that are 90 days past due will cost between 70 and 135 points.  Foreclosure, deed in lieu of foreclosure or short sale credit impact will cost between 85 and 160 points.  A bankruptcy will cost the homeowner a point reduction of between 130 and 240 points.  The points from short sale, deed in lieu of foreclosure, foreclosure or bankruptcy are in addition to the points lost due to late payments.  Most homeowners who have reached a point where short sale, deed in lieu of foreclosure, foreclosure or bankruptcy has become a necessity are likely to have missed or been late on payments prior to arriving at one of these situations.

If after selling a home in short sale, the former homeowner’s financial situation has improved and they are once again looking to purchase a home, the former homeowner may qualify for a new mortgage in as little as two years.  If the home was lost in foreclosure, or surrendered by deed in lieu of foreclosure, the waiting period to become eligible for a new mortgage increases to closer to six years before the former homeowner will be likely to qualify.

Short sales are a common option, chosen by homeowners with negative equity, to avoid foreclosure.  A homeowner who is able to list their home for short sale is allowed to sell the home for less than their loan balance.  The homeowner does not make any money from the sale of the home, but their lender does agree to accept the proceeds of the sale as payment for the loan.  Often the lender will forgive the amount that is left after the proceeds of the sale have been applied to the loan, but not always.  Sometimes the lender will pursue a deficiency judgment against the former homeowner to force the former homeowner to repay the amount that was left after the proceeds of the sale were applied to the loan.

The short sale credit rating impact that the former homeowner will notice immediately is a point reduction that can vary between 100 and 300 points.  The reason for such a wide range in points is the occurrence of past due payments prior to the short sale credit rating impact on the score.  The more late, or missed, payments a homeowner incurs prior to short sale, the greater the short sale credit rating impact.  This reduction in points is about the same as the reduction in points caused by foreclosure.

If, after the completion of short selling their property, the former homeowner can combat the short sale credit rating impact by increasing their score they will be eligible for a new mortgage in two short years.  A former homeowner who lost their home in foreclosure would have to wait between five and seven years to become eligible for a new mortgage.  Short sales, however, do remain on the report for as long as seven years which will have an effect on the former homeowner’s eligibility for credit cards or other types of loans.

Former homeowners can combat the short sale credit rating impact by working to rebuild their creditworthiness.  Anyone in this situation should keep their other lines of credit open because they will not be eligible for new lines of credit for quite a while.  Since credit scores are primarily based on payments made by the due date and low balances; one of the best ways to rebuild credit is to keep credit card balances at a maximum of 30 percent of its limit and pay the entire balance by the due date each month.  Even accounts that are no longer in use can assist in rebuilding credit because part of the formula used for determining the score is based on the length of time the line of credit has been open.  Additionally, for the first two years after short sale it is a bad idea to apply for new credit cards.  All applications for credit appear on credit reports as inquiries.  The more inquires on a credit report, the worse the report looks to other lenders.  If there is little credit history other than the negative items, a former homeowner could apply for a credit card, which would help rebuild their credit if they were approved for the card.  Applying for a new FHA mortgage after two years is possible.  An explanation for the circumstances that led to the necessity of short sale would be required to obtain approval.  A new FHA mortgage would go a long way toward repairing the short sale credit rating impact the former homeowner suffered when times were tough.

The term short sale is used for real estate transactions in which a home will not sell for as much money as the homeowner owes on their mortgage because of a decrease in the value of the home. This type of real estate transaction is done most often when the homeowner experiences a financial hardship based on lost income because they lost their job, divorced or were unable to work due to illness or injury. When a lender approves a homeowner for short sale on their home, the lender may choose to forgive the deficiency left after the sale proceeds have been applied to the mortgage or their lender may require the homeowner to sign a promissory note for the deficiency. The promissory note would require the homeowner to be responsible for the repayment of the deficiency amount to their lender. After short sale, credit report effects are usually noticed by the former homeowner.

Anyone who has applied for a loan has heard of the FICO score. This score was created by The Fair Isaac Corporation to determine applicants’ creditworthiness. FICO scores which are used by all lenders, and many other organizations, to approve or reject an application for a loan or any other type of credit. FICO scores are based on the reports that are kept by Experian, Equifax and TransUnion. These credit bureaus constantly update credit reports with information they receive from the companies with which people conduct business every day. Most companies that provide services will report late payments to the bureaus, including the power companies and insurance companies. A mathematical formula is used to determine the actual score. Payment history accounts for 35 percent of the score; the history includes the timeliness of payments, delinquencies or defaults, bankruptcy, any judgments, wage garnishments, suits or liens and how many of the accounts were paid as agreed. An additional 35 percent of the score focuses on the duration of the accounts, how many inquiries have been placed, how many accounts were opened recently and the type of accounts that are open. The last 30 percent of the score is the ratio of credit limit to credit balance for each account.

After a short sale, credit report bureaus will commonly list the short sales simply as being “paid – settled.” Other reporting possibilities are “pre-foreclosure in redemption” or “foreclosure.” Short sales that are reported as foreclosures should cause the former homeowner to contact the bureaus as loan applications do not ask about short sales, but are usually rejected if the applicant indicates they have had a foreclosure. The short sale credit report score will show a reduction in points after the transaction is completed. The reduction is not as drastic as delinquent payments over 30 days late, foreclosures or bankruptcies. Homeowners can negotiate with their lenders to encourage their lenders to report short sales as being “unrated” on their reports. An “unrated” listing is a neutral entry allowing homeowners to dispute claims of derogatory credit if they are rejected for future loans.
Dependent on how bad the former homeowner’s credit score was prior to short sale, their short sale credit report score may be reduced by an additional 75 to 300 points. Most homeowners have a score of less than 600 points after short sale.

Long-term short sale credit report effects include the need to wait a minimum of 18 months before becoming eligible for a new mortgage. This is, of course, only possible if the former homeowner is able to increase their credit score enough to be able to qualify for a new mortgage. Former homeowners can increase their credit scores by using their credit carefully.

The roller coaster dive the real estate market has taken; has caused homeowners to opt for short sales to escape the credit damage caused by foreclosure.  Short sales are defined as the sales of homes for less money than is due for their mortgages.  Short sales must be lender approved and lenders only approve if they believe the homeowners are unable to pay their mortgages and the lender will receive a larger return on their investment by approving short sale than by foreclosing.

The short sale Chicago home has become so prevalent that in one week, in April 2009, 62% of single-family homes sold were either short sales or foreclosures.  The numbers for short sale Chicago homes are still high.  Recently, it has been reported by the MLS of Northern IL that one out of every ten single-family homes sold were short sales or foreclosures.  The number of short sale Chicago condos has changed from 22% to one out of every 25 condos being foreclosures or short sales.

Several factors have played a part in the high short sale Chicago home numbers.  One of these factors is that some lenders approved loans on homes that were not really worth as much as they seemed to be based on their appraisal rates.  With the decline of the real estate market, the appraisal values of those homes dropped.  This put the homeowners in a situation that is known as being “upside-down.”  This happened more with single-family homes than with condominiums.  There are fewer variations between condominiums located in the same building than there are between homes located in the same neighborhood, making inflated appraisals less likely for condominiums.  Another factor in the significant number of short sales is the combination of a rise in unemployment coupled with rising adjustable mortgage rates.  All of these factors put homeowners in a situation where they were unable to pay the mortgage payments.  To avoid foreclosure and the damage foreclosure causes on credit reports, many of these homeowners chose to apply with their lenders for short sales.

Getting lenders to approve short sales, however, may take quite a bit of time.  It may be months before the homeowner is able to get through the process, though many lenders are agreeable to approving short sales to avoid foreclosure and thereby reducing their margin of loss.  Lenders realize approximately 50% more from allowing short sales than they do by foreclosing and selling the property through an auction.

It is necessary to negotiate with the lender to arrive at an amount the lender will accept.  After receiving short sale approval, the homeowner needs to get their short sale Chicago property listed.  Some lenders have a department that will list the homes.  If the homeowner does not want their lender to handle the listing for them, they can choose between having a Realtor handle the listing or listing the property on their own.  The homeowner can benefit from having a Realtor handle the listing for them because a Realtor can list the property through the MLS, getting more buyer exposure for the property.  If the homeowner opts to list the property on their own, they will not get as much exposure and it may take more time for the homeowner to find a qualified buyer.  This may be a problem for the homeowner’s lender; the lender may not be willing to wait for however long it may take for the property to sell, especially if the homeowner is not making their mortgage payments while they are waiting for the property to sell.

Buyers for short sale Chicago homes should realize that purchasing short sales follows the same basic principals as any other real estate purchase.  It is important for buyers to get appraisals, have inspections done and investigate for the possibility of additional liens on the property.  The big difference for buyers between short sales and other real estate transactions is the amount of money they will save by buying short sales.

While there have been claims that the worst is over and that the economy is recovering, the real estate market is still in a slump.  Although some areas have experienced an increase in property values, many areas are experiencing a decline in property values.  Property values will continue to sink as long as the need to default on mortgages causes a need for short sales and foreclosures.  One short sale in the neighborhood can cost all other properties in the neighborhood a 25 percent reduction in value.

It is a fact that housing will always be in demand, at least as long as people continue to want to live in houses rather than tents or igloos.  However, lenders guidelines do make it difficult for homeowners to sell their property if the value of the home will not allow it to be sold for as much as the homeowner owes on their mortgage.  The FHA guidelines are even becoming more stringent.  They have recently announced they will be adding in certain costs and reducing eligibility to counteract the possibility of defaults in the future.

This raises questions of why this year is different from previous years.  A peak in the short sale opportunities available will probably be seen this year.   From sub-prime loans to prime loans going bad creating a vast number of foreclosures and over 24 billion dollars in adjustable mortgage rate resets, the homeowners who were already struggling may now find that foreclosure is imminent.  These homeowners may look to short sales to avoid the foreclosures.  Even homeowners without serious financial problems do not want to continue to put money into homes that have lost a great deal of their equity.

The numbers do not lie; one out of every seven homeowners, across the nation today, is unable to pay their mortgage payments and is near foreclosure.  While the economy is supposedly slowly improving, there are no predictions for a boom in new jobs.  This means that the people who are already struggling will continue to do so.

Real estate agents who want to continue earning their living in real estate need to participate in short sale classes.  Short sale classes will provide the knowledge the agent needs to pursue all of the opportunities that are now available and will be coming available in the near future.  The future for short sales looks good for agents as lenders have now had the time they need to put systems in order for processing short sales.  The lenders also need to recoup as much of their money as possible, and are likely to approve short sales rather than pursue foreclosures.  Foreclosures cost lenders money and require the lenders to sell the property themselves.  If the property does not sell, the lender is out the money from the foreclosure, stuck with property they do not want and from which they cannot profit.

If lenders believe that the homeowner may be able to repay the deficiency from a short sale at a later date, they may be even more inclined to approve short sales.  Lenders may give short sale approval with the contingency that the homeowner must sign their promissory note.  This note will allow the lender to collect the deficiency from the homeowner in monthly payments and is a type of unsecured loan.  Short sale classes will make this entire portion of the process very clear with in-depth training.

Agents can learn how to deal with secondary mortgage holders in short sale classes.  Because secondary mortgage holders will only receive $3,000 from the short sale proceeds, they are typically reluctant to approve short sales.  The short sale classes will explain how to convince secondary mortgage holders that it is in their best interest to approve short sales.

Many lenders are losing a portion of their commissions when providing services in short sales.  Normal commissions of six percent are being reduced to three percent in many cases.  Instruction on how to avoid having this happen will be taught in short sale classes.

Another point of interest for agents participating in short sale classes will be how to handle problems with title companies.  These companies control the insurance on the short sale deals.  Their concerns are related to future claims based on the possibility of lenders backing out of deals if the title company is not in full compliance with the lenders regulations.

Agents who really want to succeed need to succeed in short sales.  To succeed in short sales these agents must learn all they are able to from the many short sale classes available to them.