This is the second installment of my three part series.

– Philip Tesoriero, Co-creator of Foreclosure Guard
You should review the short sale agreement that the servicer will provide to you. It describes and discloses the roles of all parties involved in the transaction. You do have the alternative of going to contract and applying for an “alternative short sale approval” . The standard agreement lists the following:

-    Property must be listed with a licensed real estate professional familiar with and doing business in the area.
-    Listing period of no less than 120 days and up to 12 months.
-    You must give authorization for the servicer to communicate with other parties (mainly the above mentioned real estate agent)
-    The listing must contain language that the transaction is subject to approval by the servicer or other 3rd parties.
-    The servicer will pre-approve a list price, in the case of the contract being submitted they will approve the proceeds.
-    The listing must state the amount of the sales commission, not to exceed 6%.
-    Must be an arms-length transaction ; such language is needed in the contract.
-    The buyer must agree not to sell within 90 days of the closing.
-    Seller will be released from all future debt of the lien.
-    Seller will receive up to $1500 for relocation.
-    Consult your tax professional, as there are tax considerations involved with this transaction.  You will receive a 1099C.

As long as you comply with these guidelines the servicer will agree not to complete a foreclosure sale.

It is important to understand that there are times the servicer can revoke the short sale agreement in the event of:
-    Fraud
-    Bankruptcy
-    Significant decline in the condition of the property
-    In the event your financial condition improves.
Under the terms of the agreement you may be required to pay 31% of your current income as a modified mortgage payment towards your mortgage during the agreement period. Your listing agent must also work in good faith and do everything they can to market, sell and close the transaction to be in compliance with the servicer’s agreement.

Once a buyer is procured and you have in hand a fully executed contract, they must be submitted within three days to the servicer along with proof of funds for the buyer and the title information previously discussed.  Here is the GREAT NEWS: Within 10 days, the servicer is required to reply with a decision to approve or decline.  The notice will be mailed to the property so it is important to look for it and discuss it with your listing agent as soon as it is received. If the offer is approved by the servicer they will set a closing date of no less than 45 days from the contract date, unless otherwise agreed by the buyer.

The best way for you to proceed with getting your distressed situation resolved is to work together with your listing agent. It is sometimes hard to stay motivated in this type of transaction, but working together and submitting a superior proposal to the servicing company you should see positive results and a quicker resolution to the situation.

To ensure that you are using creating the best possible short sale proposals that follow Treasure Department guidelines, be sure to use Foreclosure Guard.