To begin with, get experienced help. Here’s a step-by-step guide to the process.

Reporting from Washington — More than a few financially strapped owners have tried to unload their homes through what’s known as a short sale, only to end up stymied by what most believe to be an uncooperative lender.

Truth be told, though, lenders are so swamped these days by underwater borrowers who need permission to sell their homes for less than what they owe that they give most short shrift. But there are ways to get your lender’s attention.

For starters, align yourself with an agent who has experience with short sales. Most don’t, according to Stacy and Michael Spickes, a husband-and-wife realty team who operate America’s Home Rescue, an Austin, Texas, firm that has handled about 250 short sales over the last six years.

“Ninety-five percent of all agents don’t know how to do these transactions,” Stacy Spickes says.

An inexperienced agent could end up wasting valuable time if, among other things, he or she doesn’t understand how to put a short-sale package together, know exactly what terms the lender will accept and determine what the lender must net out of the transaction.

But even without complications, a short sale is a lengthy process that could take weeks or even months. The process often takes so long, in fact, that qualified buyers sometimes get tired of waiting for a decision and withdraw their offers and move on to another property.

Look for an agent who has established alliances with loss-mitigation staff at various institutions, if not your particular one, and can offer references of previous clients who have completed short sales.

Beyond that, here’s the step-by-step short-sale process the Spickeses have created to increase your chances of getting your lender to say yes:

* Criteria: To qualify, you must be behind on payments, have a legitimate hardship and have little or no equity in the property, generally 8% or less.

Your hardship must be genuine, but lenders these days are fairly lenient, according to the Spickeses. It used to be that only a death, medical emergency, divorce or job loss qualified.

But now, if your mortgage payment or even your property taxes rise beyond your ability to pay, lenders are typically agreeable to a short sale.

However, before deciding, lenders will want to see a financial work sheet listing all your bank accounts, real estate owned and other assets.

If you have enough cash on hand or assets that can be sold, lenders will demand that you make up the difference between what the house sells for and what you owe.

* Loan type: The shorting process is different for each type of loan, so identifying upfront whether you have a conventional mortgage, a loan insured by the Federal Housing Administration or one guaranteed by the U.S. Department of Veterans Affairs is crucial.

* Honesty: Tell your realty agent everything. Although it is important to show all the correspondence from your lender, the “last letter you received is key,” Michael Spickes says, because it will tell the agent exactly where you are in the foreclosure process.

* The package: Obtaining a copy of the lender’s short-sale package in a timely manner is the first step, but don’t wait for it to come in the mail. Pick it up yourself at your lender’s office, or have it sent electronically.

Next, know exactly what your bank wants and give it to the lender in its entirety. Even if you must wait a week or two, assemble the total package first and then submit it. Also, be certain that your name and loan number are on every sheet of paper submitted to your lender, and keep copies of everything you send.

* The listing: Don’t enter your house in the local Multiple Listing Service until you establish communication with the lender. “Don’t go active until you are sure your lender is ready to start the process,” Michael Spickes advises.

On FHA loans, you must be accepted into the pre-foreclosure sales program before the lender can consider your short sale, and it takes an average of 45 days to be approved.

For conventional loans, the bank wants to see the purchase offer before moving forward, so you must list the property first, but you still want to be certain that the lender is ready to proceed.

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By Lew Sichelman

Source: Los Angeles Times – U.S.A.