Short Sale Qualifications

The OC Register reported last week that short sales are ‘king’ and the increase in Orange County short sales seems to support that statement.  During the past two weeks, the number of short sales in the OC rose by 138, bringing the tally to 2,318.  This trend is expected to continue throughout 2010.  It’s time to find out what exactly qualifies a home to be short sale in the eyes of a lender.The first thing a lender checks is if the homeowner has a financial hardship.  Some challenges that typically lead to financial hardship are mortgage payment adjustment, loss of a job, business failure and excessive debt.  Most people in these situations will have great trouble making their payments.Next up – the lender will see if the homeowner has a monthly shortfall.  Basically, if monthly expenses exceed monthly income the homeowner will be in the red.  Proof of this needs to be documented by the agent on a financial worksheet.Finally, lenders look at whether or not the homeowners are insolvent.  This means that the homeowner does not have enough cash to cover the amount they owe.  (Lenders look at the long run, so it’s ok to have enough money for general living expenses.)The number of short sales is projected to rise in Orange County during 2010.  We’ve added services to help make the short sale process as easy as possible and would be happy to determine if the process is right for you.