Short Sales in Massachusetts
A short sale usually happens when borrowers are “upside-down” on their mortgage, meaning their home is worth less than what they owe. With lender approval, the property is sold for less than the outstanding balance, the lender will accept less than the mortgage balance, and will clear the property’s title of mortgage lien. If you own your home outright or have a mortgage balance of less than the selling price and you sell for less than you think it is worth, this is not a short sale.
Eligibility & Requirements
Short sales are usually allowed when the property value is at least 70% of the loan balance, the contract sale price is at least 95% of the appraised value and the net amount for the bank is at least 87% of the current property value.
Once the lender receives your short sale package, they will review it and determine if your situation can be approved. There may be some negotiation between the attorney and the lender to create an attractive option for both parties.
It will likely take between 60-90 days for the entire short sale process, and any attorney fees will be taken out of the proceeds of the sale. If the lender accepts your proposal, your short sale will be ready to go. Keep in mind that not all short sales are approved. For this reason, it is crucial that you submit an accurate and detailed short sale package to improve your chances.
Sometimes the lender can reach other assets to collect the deficiency but the borrower is generally considered “judgment proof.” If borrowers cannot pay the mortgage, how could they pay off the deficiency?
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