If you are facing foreclosure and can no longer afford your home, you may qualify for a Short Sale—even if you don’t think you can (or haven’t been able to) sell your home.

I want to avoid foreclosure, but I can’t sell my home for what I owe on my mortgage.

What can I do?

What is a Short Sale?

A Short Sale, also known as a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage. If your mortgage company agrees to a Short Sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds. Fannie Mae’s program is called Short Sale/HAFA II.

• You are ineligible to refinance or modify your mortgage
• You are facing a long-term hardship
• You are behind on your mortgage payments
• You owe more on your home than it’s worth
• You have not been able to sell your home at a price that covers what you still owe on your mortgage
• You can no longer afford your home and are ready or need to leave

What are the benefits of a Short Sale?

• Eliminate or reduce your mortgage debt
• Avoid the negative impact of foreclosure
• Start repairing your credit sooner than if you went through a foreclosure
• May be able to get a Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years)

What is the process for a Short Sale?

If you qualify for this option, the process is similar to a normal real estate sales transaction. You will work with a real estate agent to market and sell your home. However, your mortgage company will also be working with you and your real estate agent every step of the way to:

• set the sale price (based on current market value),
• collect financial information and negotiate with other lien holders (i.e. your second mortgage company) if applicable,
• review acceptable offers,
• agree to the terms of the sale once a buyer is in place, and
• work with the buyer’s real estate agent and mortgage lender to finalize the sale.

In some cases, you may be eligible to receive relocation assistance to use toward your moving expenses and to make the transition to new housing easier.

A Short Sale may take up to 120 days, but this could be shorter or longer depending upon your specific situation. If you are unable to sell your home, you may be able to transfer the ownership of your property to the owner of your mortgage (also called a Mortgage Release or Deed-in-Lieu of Foreclosure).

Next steps

Gather your financial information —Make sure you have your basic financial and loan information on hand when you call your mortgage company. You’ll need:

• your mortgage statements, including information on a second mortgage (if applicable);
• your other monthly debt payments (e.g. car or student loans, credit card payments); and
• your income details (paystubs and income tax returns).