Short sale is considered an inevitable option in cases when homeowners cannot comply with their monthly dues and financial obligations. Although the eventual effect of short sales in the credit standing of the borrower is not as bad as that with foreclosed properties, it is still a dreaded reality. Yet with the trend of economic uncertainties experienced in a global level, the inevitability of short sale is becoming more apparent and increasing.

Even though lenders and borrowers both do not want the occurrence of short sale in their investment, there are still facts that the latter need to know. These facts are often hidden and kept from them by lenders in order to protect their own interest in the process.

What facts lenders do not disclose about short sale?

It is imperative to know that lenders and banks equally dread short sales because of its gradual impact on their venture. More than anyone else, lenders are the ones greatly affected whenever properties are set for short sales. The effect is on the cancelled loan and the interest rate that is supposedly due for payment. Hence, in order to prevent short sales, here are some of the things lenders do not divulge to their borrowers regarding the pending home sale.

Timeline. One of the delaying tactics utilized by most lenders and banks is the long period of approval for the short sale. Banks have loss mitigation departments that take care of the issues and concerns regarding short sale. It requires innumerable documentations and other forms of requirement before they grant the short sale approval. In such cases, it is a disadvantage for the seller, who in spite of getting a potential buyer for the property, may still face the possibility of losing them due to extended period of waiting. This is often taken in a subtle way, but it is surely an effective method of preventing short sale. Market value. Lenders do not divulge salient information which they consider private and confidential such as the market value of the property listed for short sale. They may also include the expected sale margin for the property which is likewise important. The lack of these significant information often shoo away potential buyers causing delay for the sale. Closing cost. In every home purchase, there are definitely closing costs, charges and fees required for the process of the acquisition. This is another important fact that most lenders are not willing to disclose to borrowers to prevent short sale. Buyers often find themselves in compromising situations causing them to back out from the deal due to a longer application process.

Lenders and borrowers definitely have a vital role in instances of short sale, however both parties are always in constant lookout for ways to protect their respective interests. In cases when lenders deprive you of important information you need to know especially about short sale, there are real estate professionals and consultants you can ask to remedy your dilemma and bring possible solution to your problem.

There have been numerous measures taken by legislators and private organizations to pursue advancement of consumer protection in the real estate industry. A buyer or seller can also benefit from various online sources that provide guidelines in entering a particular transaction. Then again, there are some aspects that the lenders or banks themselves do not divulge to their clients. For one, there are details of short sales your lender would not tell you before or even during the transaction.

First of all, lenders are not legally required to disclose every single detail to their borrowers. They are given the right to acquire their own measures in protecting their investments. Especially with short sales, lenders have full control whether to give you a shot in entering this venture. As they want to still yield profit despite losses from your delinquency, they would naturally do everything in their power to manipulate the transaction. However, as a consumer, you also have the right to be in the know of the transaction aspects that can affect your decisions. Below are some areas where lenders tend to keep some sort of confidentiality.

Hardship letter contents

Only one out of ten applications for a short sale gets to be approved in most banks. Most lending companies approve hardship letters that are compelling enough. This may seem shallow but even the ink color and paper used can influence some lenders. Then again, they can easily sense if your appeal is lacking authenticity.

Disinterest in your property

The main concern for lenders is the money you owe them. They are particularly evaluating your property either as an asset or a liability. And once you fall out with your dues, the lesser interest they would want to keep your property, lest visit your home. They will do every measure to fast-track disposal of your property. Then again, they will not disclose such information so as you will maintain attachment to the home, thus, remain indebted to them.

You can stop paying your mortgage

A lending company will be more motivated to accept a short sales if you default on your mortgage. Note that it is not necessary to be in default before you can consider entering a short sale. But once you take on this option, there are pressing drawbacks you have to thoroughly think of. Firstly, your credit report will suffer. You may be restricted from buying a new home and even easily lose your property to foreclosure.

No repayment obligation

This is only applicable if you are facing true financial hardship. You have to prove you have no other saleable assets to gain profit from or extremely have no means to pay your mortgage dues. Lenders are prohibited to enforce you to pay back what you owe if this is the case. But this does not mean the lender cannot file for a deficiency judgment.

By learning these ‘trade secrets’, you can be more adept in formulating a proposal that your lender will most likely approve of. On the other hand, being overly complacent that you will ace the approval of your short sale endeavor is still not advisable. You have to continuously plan ahead of time and be prepared of other demands your lender will present to you

Real Estate Weekly: Do you regret buying your home? Most people don’t
In a housing market like this, you’d expect a good deal of buyer’s remorse out there. But 90% of homeowners say they don’t regret buying their current home, according to a survey released this week by Bankrate.com.

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Primary residence, first time buyer, purchased condo at $298K in August 2006. Had 80/20 option ARM, both lenders finally agreed to short sale. Property will be sold by end of this month for $145K. How do I make sure that I don’t end up paying taxes for the difference? Am I covered under the Debt Relief Act?