What is a Short Sale?

A Short sale by definition is when a lender or Lenders agree to accept less than the total amount due on a property. Not all lenders will accept Short Sales or a discounted payoff.

See Educational Videos for further explanation (numbers 1, 3 and 4)

What is the short sale process and how long does it take?

Although all banks vary to some degree, most banks follow the same basic 3 step process.

          Document gathering–

During this process, we gather all the documents the bank requires to process the short sale.  We work with you to explain your hardship and the reason for the short sale.  This process generally takes 30-45 days. 


During this process, we present the offer to the negotiator and work to get the ultimate investor to approve the short sale and we negotiate the settlement of the any resulting deficiencies.  This process generally takes 30-45 days, but generally cannot start until we get an offer on your house.


After we receive written approval, we will generally have 30-45 days to close.  During this time we work with the real estate brokers to make sure the inspections and appraisal are completed and address any issues that may arise.  We work closely with the escrow officer at the title company to make sure the final closing statement (HUD) is prepared correctly and we get the final HUD approved for closing.

Document Gathering                                          Negotiating                                                     Closing 

[30-45 days]                                                         [30-45 days]                                             [30-45 days]

[                                               90                                                                                          135         days              ]

Some lenders and some federally insured loans (like FHA) have a slightly different process and longer time lines.

What are the Tax consequences of a Short Sale?

Metro Mortgage is a consulting firm specializing in expediting short sales. Metro Mortgage is disclosing that they are not attorneys or certified public accountants.

Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income. Have your accountant review and fill out IRS Form 982.  We want a 1099 C to be issued.

Watch Educational Video number 6 for further explanation.

What are the Credit implications of a Short Sale?

There can be adverse affects to a person’s FICO Score. There can be adverse affects on when a person can qualify for a FHA, Fannie Mae or Freddie Mac loan.

Watch Educational Video number 5 for a more detailed explanation.

What are the Advantages of a Short Sale over Foreclosure?

  • Less of a negative impact on your FICO score.
  • Ability to purchase a home quicker in the future.
  • HAFA and other short lender incentives may allow you to walk away with as much as $30,000 after the short sale is completed.
  • Ability to negotiate with Junior lien holders.  These lien holders have a de-collateralized note with the ability to sue you for collection for years if a settlement is not negotiated prior to closing.
  • You are generally able to stay in your home without making payments for a longer period of time.
  • On a Oregon Residential Trust Deed ( as defined by ORS 86.770), you are generally assured that the foreclosing bank is not going to be able to pursue any deficiency.
  • Home Owners Assotiation dues and assessments and Property Taxes are also generally included in a short sale settlement.

See Educational Videos 1 and 2 for further discussion.

Can I short sale my house while it is going through foreclosure?

Yes, during both a judicial and a non-judicial foreclosure, we can complete a short sale.