The Importance of Knowing the Loan Type in a Short Sale

Originally Created On:
November 18th, 2010 at 4:13 pm

This is the second post in the keys to a successful
short sale series.

 

One of the first questions I ask a homeowner is, “what is your loan type?” Knowing the loan type is crucial for a successful short sale. Is it a FHA, VA, Fannie Mae, Freddie Mac, state and local housing loans, etc. Is there Private mortgage insurance? Who is the investor behind the loan? The type of loan will determine the following:

·         How the property is listed

·         How you submit the offer

·         Who the investor is

·         The time it will take to complete the short sale

·         Will they order a BPO or an appraisal

·         What percentage of the value will they accept for the gross offer

·          What percentage of the value will they require to net

·         How much they will allow to go to junior lien holders

·         The closing costs they will approve

·         The amount of commissions paid

·         Will they allow seller’s concessions

·         Will the buyer have any restrictions to when they can resell the property

The loan type will help you craft an offer and strategize how you will negotiate with all lien holders. This could be the difference in getting the best deal for you or your buyer, and getting the short sale approved and closed in a timely fashion. Submitting a short sale without that knowledge is akin to coaching a football team without a play book. I guarantee the Mitigator has a playbook, and they will use it to benefit their interests. The loan type will give you insight to their policies and in some cases you are able to obtain that playbook. Ok, enough of the football metaphors. The Eagles Monday night demolition of the Redskins is still on my mind.

I could write an e-book on the differences between each type of loan and the short sale strategies associated with each loan type; maybe I will…stay tuned. If you have questions regarding a loan type and how to get a short sale approved faster, ask a question on the right side of the screen and provide me with your email address, so I can respond.

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