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Short sales are a way for many homeowners to sell without having to risk a foreclosure on their home. Investigating with a state’s short sale regulations will reveal that some states, such as California, will forgive any remaining mortgage left on the home after the sale. Other states, like Florida, will require sellers to repay the balance that was not included in the sale price. Banks usually negotiate and work out a reasonable payment plan that mimics the process of student loans. There are hardship periods built into the program, and this is a necessary process as there is no note or property to attach debt to.
The benefits of a short sale on a home include relieving the family of the burden of the mortgage, allowing the family to quickly vacate and get rid of the home, and allowing a family to quickly sell their home without the ugly credit marks of a foreclosure being attached. Many people find this to be the best solution for them as it preserves their credit, but also their dignity in many cases. The home is able to be showcased as a regular for sale property, meaning the family can remain in the home during the process.
As far as banks are concerned, they want to be able to verify that the information of the short sale, and the events surrounding the need, are being presented accurately. Many banks will request a written application, a bid price for a short sale buyer, and income verification from the current owners. This is intended to protect the bank?s interest in the dealings, and it ensures that the process is being completed through honest intentions. Some applications will run credit checks, employment verifications, and will request referral letters. This is all to verify the information that a dire hardship is present.