Danielle Alleyne




1. What is a Short Sale?
A Short Sale occurs when a Lender agrees to allow the homeowner to sell the home on which the Lender has a mortgage for a price that will result in the Lender receiving less than the total amount due on the mortgage. In order to qualify for a Short Sale, the homeowner must be able to demonstrate to the Lender that a financial hardship has severely compromised his or her ability to repay the loan. Lenders have varying requirements and may demand that a borrower submit a wide array of documentation – WNCW’s ASAP is designed to help Agents and Sellers navigate the Short Sale process.


2. What circumstances may qualify for consideration as a financial hardship?

  • Job loss/unexpected unemployment
  • Job demotion
  • Spouse’s loss of income
  • Divorce
  • Job transfer to another state
  • Death in the immediate family
  • Sudden illness or medical emergency
  • Excessive debt with mounting obligations to pay
  • Inability to pay an adjustable interest rate that has increased
  • Unexpected major home maintenance expense


3. What are the potential benefits of a Short Sale?
Losing property ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity is one of the most difficult ways to lose a home. For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings.

One of those options is called a "Short Sale."

  • Avoid foreclosure and eliminate your mortgage payment. The following is a comparison between a Short Sale and a foreclosure and generally how each effects your credit and future ability to purchase another home:
Short Sale  Foreclosure
• May remain on credit for 5-7 years
• Less significant impact on credit score
• Possibly purchase a new home within 2-7
years depending on down payment and
any extenuating circumstances
• May remain on credit for 10 years
• More significant impact on credit score
• Possibly purchase a new home within 3-7
years depending on down payment and
any extenuating circumstances


  • There is little or no cost to the homeowner in a Short Sale.
  • The selling and buying agents’ commissions, attorney fees, and other costs and fees relating to the Short Sale, including closing costs, are typically reduced from the amount owed the Lender.
  • The Lender may forgive the difference in debt between what you owe and the final price. The information provided herein was gathered from reliable sources as of December 21, 2010, and may be subject to change.


4. What are the potential drawbacks of a Short Sale?

  • There is no guarantee that the Lender will accept a Short Sale.
  • You will need to provide up to 2 years of detailed financial information.
  • Your credit will still be damaged by a Short Sale. However, the long-term effects are less harsh than they would be with a completed foreclosure or bankruptcy.
  • There may be tax consequences – you are advised to consult with an accountant or attorney to insure that you fully understand the potential taxable consequences, if any, of receiving a Short Sale approval.
  • Even if you can qualify for a home loan in 2 years, the interest rate you will be able to obtain may be higher than those available to borrowers without a Short Sale or you may be required to provide a larger down payment than borrowers without a prior Short Sale.


5. In addition to the documents I provide ASAP, what other types of documentation will I need to provide to my Lender?

  • Signed and dated financial worksheet listing all monthly expenses
  • Signed and dated hardship letter (a letter to the Lender explaining why you are unable ton pay)
  • Last two years’ tax returns
  • Two most recent bank statements
  • Third party authorization form (authorizing the Lender to speak with WNCW’s ASAP department)
  • If self-employed, a current year-to-date profit and loss statement
  • Two most recent pay stubs (within the past 30 days)


6. Should I give my documents to my Listing Agent?
Documents that do not contain confidential, financial or personally identifiable information may be given to your agent for forwarding to WNCW or you may forward them directly to WNCW’s ASAP Department. Documents that contain confidential, financial or personally identifiable information should be placed in a confidential envelope and sent directly to WNCW or given to the agent for forwarding.


7. Will the ASAP staff communicate with me directly?
Yes. ASAP staff will be in direct contact with you in order to coordinate and collect all documentation for the Short Sale Lender. ASAP staff will provide regular updates to you and the agent on the progress of the Short Sale application.


8. What is the cost?
In addition to normal closing and title fees, the Seller will pay WNCW a fee of $1500 to be disclosed on the HUD and collected as a part of the closing costs normally paid by the Lender in a Short Sale transaction. As stated in the Short Sale Agreement by and between you and Weissman, Nowack, Curry & Wilco, P.C. the $1500 fee is netted from the Lender’s proceeds at the closing of the sale of the property. If closing does not occur or if the Lender does not approve the fee, no fee is due.


9. How long does the process take?
Contrary to its name, a Short Sale is not typically a short process. The review process generally takes between 2 to 3 months but it can sometimes take up to 6 or more months.


The information provided herein was gathered from reliable sources as of December 21, 2010, and may be subject to change.


10. How long is the Short Sale approval good?
The approval is generally good for 45 days, although the Lender will establish a specific goodthrough date for each transaction. If the Short Sale fails to close, the entire Short Sale package may need to be resubmitted with updated information, or you may need to start the approval process over from the beginning.


11. Can a relative buy a home from another relative as an investment property through a Short Sale?
No. The Short Sale must be an “arm’s length” transaction. This means the property may not be sold to anyone the seller has a close personal or business relationship with, including family, friends or neighbors.


12. What is the difference between a promissory note and a mortgage?
Most people think of their mortgage or security deed as being the promise to repay the debt on their home loan; however, it is the promissory note that is the promise to pay. You would have signed both the note and the security deed at the closing of your purchase. The promissory note is secured by the mortgage/security deed. The mortgage/security deed is the financing instrument that records the Lender’s security interest in your home and it is recorded as a lien against your property in public records. Foreclosures and deficiency judgments are a result of a default on the promissory note -- or, in other words, a default of your promise to pay the debt in full. As a result, while the Lender may release a security deed after a Short Sale approval, it is also possible that the Lender may still hold you personally responsible for the deficiency by virtue of the promissory note.


13. What is a deficiency?
A deficiency is the difference between the amount the Lender accepted in return for releasing the security deed and the total that you owed to the Lender on your loan. If your promissory note provides that you are personally liable for the full amount of the loan, the Lender could pursue you for the deficiency.


14. How will I know if the Lender will seek the deficiency from me?
Typically, the Lender’s letter approving the Short Sale will address whether it will seek the deficiency from you. Occasionally, Lenders may request that you make a cash contribution or sign an unsecured note for some or all of the deficiency. For example, if a Lender accepts a sales price of $1,000 for a property on which it has a $100,000 mortgage through a Short Sale, the security for that mortgage (the property) would be released, but the $99,000 remaining due under the terms of the promissory note may not be. The remaining $99,000 is the deficiency for which the Lender may hold you as the Seller personally liable.


15. What is a “Deed in Lieu” of Foreclosure?
With a deed in lieu of foreclosure, a Seller “deeds” their home to the Lender in exchange for the Lender canceling the loan. The Lender promises not to initiate foreclosure proceedings and to terminate any existing foreclosure proceedings. The Seller should also ask the Lender to agree, in writing, to forgive any deficiency that remains after the home is sold. The Lender may require that a Seller put their home on the market for a period of time, usually three months, before they will consider a deed in lieu. The information provided herein was gathered from reliable sources as of December 21, 2010, and may be subject to change.


16. What should I do if a Loan Modification request is being considered by the Lender and I wish to submit a Short Sale request to the Lender instead?
Each Lender treats this situation differently. You should check with your Lender to find out how to proceed before submitting a request to your Lender for Short Sale consideration.


17. What programs are available to help me avoid the stigma of a foreclosure?
There are two programs available through the Treasury Department: The Home Affordable Modification Program (HAMP) and the Home Affordable Foreclosure Alternatives Program (HAFA). HAMP is designed to enable borrowers/homeowners to modify loans to a level that is affordable and sustainable for the long term. HAFA, which is a part of HAMP, provides financial incentives to servicers and borrowers who utilize a Short Sale or deed-in-lieu to avoid foreclosure on a HAMP eligible loan. Both of these foreclosure alternatives reduce the need for potentially lengthy and expensive foreclosure proceedings. The options help preserve the condition and value of the property by minimizing the time a property is vacant and subject to vandalism and deterioration. In addition, HAMP and HAFA generally provide substantially better outcomes than a foreclosure sale for borrowers, investors and communities.

A) HAMP – In order to be eligible for HAMP, you must meet all of the following guidelines:

  • Only personal residences are eligible
  • The mortgage amount must be less than $729,750
  • The borrower must suffer a hardship such as loss of income, an increased mortgage payment or an unexpected increase of expenses
  • The mortgage must have originated before January 1, 2009
  • The PITI (principal, interest, taxes and insurance) mortgage payment, including HOA (homeowner’s or condominium association dues), must be more than 31% of the borrower's gross monthly income

B) HAFA – In 2009, the Treasury Department introduced the HAFA program to provide a viable option for homeowners who are unable to keep their homes through the existing Home Affordable Modification Program (HAMP). The HAFA program took effect on April 5, 2010 and expires on December 31, 2012.

Financial Incentives:

  • $3,000 for borrower (seller) moving costs
  • $1,500 for servicers to cover administrative / processing costs
  • Up to $2,000 for investors who allow up to $6,000 in Short Sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis)


  • Primary Residence
  • First Lien Originated Before January 1, 2009
  • Delinquent Mortgage / Foreseeable Default
  • Current Unpaid Principal Balance Does Not Exceed $729,750
  • Monthly Payment Exceeds 31% of Gross Income

The information provided herein was gathered from reliable sources as of December 21, 2010, and may be subject to change.


Given that the borrower, mortgage and servicer all meet the above qualifications, then the Lender must consider HAFA if the borrower:

  • Is denied a HAMP trial period plan
  • Does not successfully complete a HAMP trial period plan or is denied a permanent HAMP modification
  • Is delinquent on a HAMP modification (misses at least 2 consecutive payments)

For more information on HAMP and HAFA visit www.hmpadmin.com


18. Who do I contact with questions about ASAP?
Danielle Alleyne
Phone: 770-283-7648
Email Danielle Alleyne