What is the process for a short sale in Florida?

Written by Dana O'Hara Smith on .

Serving both Martin County and Saint Lucie County

A short sale is when you owe more to the bank than your property is worth.

Once you stop paying your mortgage, the bank clock starts ticking toward the foreclosure process.

Processing a short sale is slightly different than a regular sales process. There are a few steps to follow:

  1. Find a realtor who is familiar with the short sale process, and knows what documents and processes you need. The realtor needs to be very detailed, and keep a running timeline and be on top of paperwork.
  2. You need to prove that you have financial hardship and cannot pay the mortgage. You will need to write a hardship letter.
  3. You are going to want to find out who owns your loan. Is it Fannie Mae? Freddie Mac? FHA? VA? USDA? All of these entities have their own paperwork and processes.
  4. You will need to get together a document package. The package must be 100% complete, or it will bounce back and cause further delay.

You will need to provide your servicer with a hardship letter. A short sale requires that you to gather supporting documents such as tax returns, pay stubs, and additional financial documents.

If you have more than one loan on the property, the junior lien holder needs to give approval. If you have PMI you will need to get a release of deficiency. If you have an HOA, you will need to know the amount owed.

If you have an IRS tax lien, this process can take extra time. A short sale will not be approved until the tax lien is taken care of.

Once all the documents are together, they will be submitted as a package. Be sure you get a receipt/proof that the documents were submitted. The package has to be perfect, with every single requirement on the list submitted, or it will bounce back and cost considerable time. The lender is required to respond in 30 days.

If the paperwork is approved, the servicer will establish a listing price. The sales process can take up to  30-60 days for the GSE’s and for a non GSE it can take up to 90-120 days. Once the house is listed and is under contract, make sure there is ample time on the contract for the loan commitment letter for the buyer.

Fannie Mae “may” provide the borrower with a deficiency waiver, thus “waiving” the balance of the loan amount that is owed, but there is no promise that this will occur.

Dana O’Hara Smith has closed several short-sale properties and has the experience and communication skills to help you through this process.


Dana O'Hara Smith
Reed Real Estate

Hobe Sound, FL 33455

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