Short Sale - Posted by Jay

Posted by Michael Morrongiello American Note on October 06, 1999 at 22:10:44:

A short sale is where a lender is willing to take LESS than the actual amount due to them as a complete payoff of the financing they hold.

Many lenders can then use this “shorted amount” as a loss against other income they earned. Lenders who realize that they may be holding a loan positon on a property that is run down or has depreciated in value or where they simply do not want back a property where they hold a non-perfoming loan are good approachable candidates for “Short Sales” .

NOTE: if you are the payor on an obligation and attempting to negotiate a short sale be aware that there may be some income tax implications for relief of mortgage debt that the IRS will assess against you as income.

Michael Morrongiello
Operations Manager

Short Sale - Posted by Jay

Posted by Jay on October 06, 1999 at 09:19:05:

Anyone know what paperwork is needed on a short sale? I have a mortgage lender that will accept a payoff and want to make sure I provide the correct paperwork.

Also, would I need anything different if I were buying and “assignment” of the existing mortgage and note instead of a “payoff”. This maybe the route to go if the title search comes back with some suprises. Thanks a bunch…

Definition? - Posted by Glenn Crocker

Posted by Glenn Crocker on October 06, 1999 at 21:40:48:

Could someone please give a good definition of a short sale?

Re: Short Sale - Posted by David Butler America’s Note Network

Posted by David Butler America’s Note Network on October 06, 1999 at 15:30:54:

Hi Jay,

I’ve negotiated several short sales with lenders over the years; never used any forms though, except for an authorization form signed by the Payor, allowing the Lender to talk to me about the Payors]'s loan details.
I’ve done all mine over the phone, followed by a letter recapping the verbal agreement. Mine have all been done on purchase contracts with short sale language in the financing contingencies, a signed copy of which I also send to the Lender.

They then have sent their “short” payoff demand to the title company to close, and that was it.

As to buying the loan itself, just a letter agreement will do, and have the title company provide an Assignment of Beneficial Interest form. This should do the trick for you… at least, it always has for me.

Re: Definition? - Posted by Dave T

Posted by Dave T on October 06, 1999 at 22:19:21:

Short sale occurs when lender accepts less than full payoff amount as full satisfaction of existing note.

This often happens when there is a rapid rise in real estate prices followed by a decline. Buyers who purchased their homes at the market peak can not sell for enough to pay off the mortgage. The seller may be able to work out a deal with the lender to accept less than full payoff to release the lien on the property. This is called a “short sale”.