Short Sale
191 Sand Creek Rd, Ste 100 Brentwood, CA 94513
So, you’re facing foreclosure or considering a short sale….now what?? Try to look at the
situation without attaching your emotions. When viewing the situation from a strictly
business standpoint, you can more successfully analyze your options and determine
which might best suit your needs and desires and move you towards resolving your
financial difficulty. One very important thing to remember: Time is of the essence,
take action.
Know Your Options:
1. Refinance: Completely paying off the entire loan amount plus any default amount and
fees. Usually, this is accomplished through a refinance of the debt. New debt is a
normally higher interest rate and there may be a prepayment penalty if there has been
a recent default. With this option, you will want to make sure there is equity in the
2. Loan Modification: Utilizing your existing mortgage company to refinance the debt or
extend the terms of the loan. This may allow the homeowner to catch up at a more
affordable level. To qualify, you must prove to the lender you have fixed the problems
that caused the late payment(s) or inability to continue to pay.
 Forbearance: Lender may be able to arrange a repayment plan based on the
homeowners financial situation. The lender may even be able to provide a
temporary payment reduction or suspension of payments. Information will be
required by your lender to show that you are able to meet the new payment
plan requirements.
3. Deed in Lieu of Foreclosure: Give the property back to the bank instead of the
bank foreclosing. Banks generally require the home to be well maintained, all
mortgage payments and taxes must be current. Most banks will ask the homeowner
to qualify for this option as they may not be able to collect on any mortgage insurance
4. Sale: If the property has equity (money left over after all loans and monetary
encumbrances are paid). The homeowner may sell the home without lender approval
through a conventional home sale. In this case, the homeowner will get cash from the
sale. On the other hand, a Short Sale (also known as a pre-foreclosure sale) can be
negotiated with your lender by a Real Estate Professional if what is owed is MORE than
the property value. (Please see following pages for more information)
5. Do Nothing/Foreclosure: If a homeowner does nothing, they most likely will lose
their home at a foreclosure auction. Loan applications generally ask if the applicant
has ever been foreclosed upon. Credit reports also disclose this damaging information.
Therefore, doing nothing is never the best option.
 Reinstatement: Completely paying the entire default amount plus interest,
attorney fees, late fees, taxes, missed payments and fees. This can be done at
any time up to 5 days prior to the Trustee Sale (foreclosure auction)
*Bankruptcy: This option can liquidate debt and/or allow more time. At this time it will
not stop the ability of the lender to foreclose, only postpone the process. PLEASE FULLY
 Chapter 7 (Liquidation) Completely settle personal debt
 Chapter 13 (Wage Earner Plan) Payments are made toward a plan to
pay off debts in 3-5 years.
 Chapter 11 (Business Reorganization) A business debt solution.