Short Sale Process Timeline

A mortgage short sale process allows the borrower to sell their home for less than what is owed on the mortgage and it prevents the seller from having their credit bureau score severely damaged. Although there is still a penalty with a mortgage short sale, it does not have the same ramifications of a mortgage loan foreclosure penalty. Below I have outlined the step by step process of an estimated timeline of the entire short sale process. Begin by:

Listing your home with a realtor and obtain a buyer who is interested in purchasing your home. A mortgage short sale cannot occur until you have a purchase agreement contract from an interested buyer.

Contact a reputable short sale firm which is attorney based.

The short sale company will have a set of documents that the seller must complete in order for them to speak the lender on their behalf. There are additional supporting documents the seller must also include in order for the short sale company to evaluate their current financial situation. They include but are not limited to: pay stubs, tax returns, bank statements, homeowners insurance, driver's license and social security card.

Once the short sale company has the purchase agreement contract, their short sale package and supporting documents, they can begin the mitigation process. From the time the entire package is faxed to the seller's lender, until it reaches a processor, can take anywhere from 2 weeks to 45 days. Due to the large backlog of files and staffing issues, this is delaying the mitigation process for the seller. The government is beginning to place a mandate on the lenders to increase this process to 21 days.

The package has now been accepted by the lender, a processor has been assigned to the file and a BPO (broker price opinion) is ordered, which is another name for a "drive by appraisal". The lender asks a third party individual or company to complete this task. From the time the broker price opinion is ordered, completed and entered into the banking system can take approximately 20 days.

Now mitigation begins between the short sale company and lender. This negotiation can take anywhere from 20 days - 2 months. They go back and forth trying to obtain the best case scenario for the seller. Every deal is different and there are no two deals exactly the same. Once a verbal agreement is made the short sale company will receive a written agreement in 7 - 10 days.

Once the written agreement is received the closing between the seller and buyer must occur within 20 days or penalties are assessed to the seller.

After the closing has successfully completed, the borrower should view their credit report and score to analyze the effect this short sale had on the 3 credit bureaus.

This timeline can increase or decrease depending on the lender. The larger lenders have a tendency to take longer than your smaller ones. However, the government is trying to mandate the lenders to change their process and expedite their procedures. This alternative solution will stop foreclosures from occurring and ultimately stabilize our economy.