Foreclosure is of one of the most traumatic experiences a homeowner can face. The embarrassment of losing a home to foreclosure is compounded by the foreclosure's devastating effects on your credit scores and ability to qualify for new credit. With an increase of 79% in foreclosure rates in 2007, increasing number of homeowners are facing the nightmare of losing their home. If you can no longer afford to make your mortgage payments, there are alternatives to foreclosure proceedings. One of the options receiving a lot of attention in the news is called a "short sale."

What is a Short Sale?

A short sale is as an "agreement" between the homeowner and lender to allow a home to be sold for less than the amount that is owed on the mortgage. Short sales can be a helpful compromise for everyone involved. For a debt-ridden Seller, a short sale spares them some of the pain, embarrassment, and credit challenges that result from foreclosure. The lender avoids the work and expenses involved if they had to seize and auction off your property. The seller receives no money from the sale of the home but the lender does not report the transaction as a foreclosure to the credit bureau.

Selling a home through a short sale differs from selling a home under normal circumstances. While a buyer and seller may come to some sort of agreement on their own, the lender in a short sale will ultimately have final approval of any sales contract.

It's important to note that the short sales occur at the sole discretion of your lender. Not all lenders will agree to short sales or discounted payoffs, especially if foreclosure presents them with a better opportunity to recoup their losses. Additionally, not all sellers and properties qualify for short sales. Usually, Borrowers must be at least 91 days delinquent before a lender will even discuss a short sale. There may be tax ramifications associated with any short payoff or foreclosure; therefore you should contact your tax advisor or lawyer before proceeding.

How Do I Proceed With A Short Sale?

Requirements vary from lender to lender, but most will demand that you prepare and submit a extensive array of documentation. This includes a written declaration ("hardship letter") and supporting documentation proving an inability to make payments. You may be required to submit pay stubs, tax returns, and statements listing your assets.

This task can be made less daunting by employing the services of a loss mitigation specialist. These financial consultants have solid working relationships with mortgage lenders which allow them to help you avoid the common pitfalls you would encounter trying to negotiate with the lender yourself. Time is of the essence in finding the right alternative after defaulting on a loan. The average consumer might spend days making phone calls just to find the right department or person responsible for handling short sales for your lender. Figuring out the proper documentation to submit is both confusing and time consuming for consumers with little experience with the process.

A loss mitigation consultant will perform a thorough assessment of your personal finances and analyze your lender's loss mitigation policies. They negotiate with your lender to find you the best possible solution to your home foreclosure problem. Their expert assistance with document preparation can present a much stronger case to convince the lender to agree to a short sale.

Loss mitigation consultants can also advise you about several additional alternatives to foreclosure besides short sales. Some homeowners situations are better served by Repayment Plans (Forbearance Agreement), Loan Modification/Refunding, or Deed-in-Lieu of Foreclosure.

Financial hardships are sometimes unavoidable. If you can no longer make payments on time, contact a loss mitigation consultant immediately to discuss your options. Alternatives to foreclosure exist and quick action on your part can save your credit score and leave you with less financial challenges in the future.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Short Sale Training - The Biggest Short Sale Mistake
I'm writing to let you know about the #1 way to speed up the Short Sale process that very few Realtors actually know about. Not using this strategy is the Biggest Mistake most Short Sale Realtors make. It may not be what you think, because it's not a "traditional" real estate strategy... I can't ... more...

Short Sale 101
This occurs when the net proceeds from the sale of a home are not enough to cover the sellers' mortgage obligations and closing costs, such as property taxes, transfer taxes, and the real estate practitioner's commission. The seller is unwilling or unable to cover the difference. Some ? although by ... more...

Short Sales - 3 Key Factors Gurus Never Tell You About How To Do Short Sales
For those of you who are new to the Short Sale arena or new to real estate investment, let's first define what a "short sale" is and what it's SUPPOSED to accomplish. A short sale is the process of negotiating with a Mortgage Lender to convince them to accept less than the Homeowner's mortgage ... more...

Short Sale Questions
The main stream media continues to be rich with stories about the struggling real estate market, here in the Sacramento area as well as across the country. They generally revolve around the increasing number of foreclosures, the mortgage crisis and now some of the government programs that may or ... more...