What is a short sale?
A short sale is a sale of your property where the mortgage lender agrees to let the homeowner sell their property for less than what is owed on the mortgage. In a short sale the lender agrees to take less than the full amount owed on the mortgage and to accept the sale proceeds as full satisfaction of the debt.
The benefit to the homeowner is that their house is not sold at a Sheriff Sale. The short sale benefits the lender because they don’t incur the costs and time of going through the entire NJ foreclosure process.
During the short sale process, the homeowner remains the property owner and has the responsibility for selling the home. The sale cannot be finalized without the lender’s approval which can be a complicated and time consuming process. One of the most important factors in getting the mortgage company to agree to the short sale is for the homeowner to show there is an undue hardship.
After the short sale the homeowner might still be liable for the mortgage deficiency. It is therefore important that as part of the short sale agreement with the lender, that the homeowner negotiate the lender’s waiver of its right to get a deficiency balance against the homeowner as part of the short sale agreement.
They may also be negative tax consequences and other fees as a result of a short sale.