FREE "Is a Short Sale on the Table?" Quiz

The questions

Quick questions about the loan, the house and the clock — never about what it is worth. Your full answer appears right here on the page the moment you finish: which path fits best, with a plain first step — and "a short sale is not for you" is an answer it gives.

1. Where is the house?
2. Do you want to keep the house, or are you ready to move?
3. Is the hardship temporary or lasting?
   A lender asks this first. Temporary means the income that paid the loan is coming back; lasting means the payment is not coming back into reach.
4. Would a sale pay the loan off in full?
   Go by your lender’s payoff letter — the balance plus arrears and fees — against what a sale would bring after closing costs. If you have not seen a payoff letter, say so; your servicer will send one.
5. Is a trustee’s sale date already set?
   In Tennessee a foreclosure is a trustee’s sale under the deed of trust; the notice gives the date.
6. Is there a second mortgage, an HOA lien or a tax lien on it?
   Every lienholder has to agree to a short sale, and a lender will not usually take a deed back with other liens on the title.

What it can tell you

Every answer this check gives, in full — one of them is yours once you have answered. Nothing here is held back for a sign-up.

1. A sale date under 30 days out — call a Tennessee real estate attorney today

   Stop reading and make the call. With a trustee’s sale under thirty days out, every option below needs the sale postponed first, and that is an attorney’s job and a same-day one — the servicer, a reinstatement figure, a written postponement. Nothing on this page should be done before that call. Send Shawn your answers and he will point you to someone today if you do not have one.

2. A traditional sale — a short sale is not for you

   If a sale would clear the loan, there is nothing short about it and nothing for the lender to approve: you list it, you sell it, the payoff is paid at closing and what is left is yours. Do not hand that back with a deed in lieu. First step: ask the servicer for the payoff letter in writing and, if you are behind, what it takes to reinstate — then read the Seller Readiness check and decide how you want to sell.

3. You are current and want to stay — a short sale is not for you

   A short sale is a lender agreeing to take less than it is owed because a hardship means it will not be paid. You are paying, and you want to keep paying. There is no lender conversation to have yet. If the worry is that the payoff is more than a sale would bring, that only matters on the day you sell, and time and payments both move it. First step: nothing with the lender. Keep the payments current and come back to this if something changes.

4. Keep it and catch up — forbearance or reinstatement

   A temporary hardship and a wish to stay is the case the loss-mitigation rules were written for. A forbearance pauses or reduces payments for a set period; a repayment plan adds the arrears to the payments that follow; a reinstatement pays what is owed in one sum and the loan is current again. First step: call the servicer, say the word “hardship”, and ask for the loss-mitigation application and a reinstatement figure in writing. A HUD-approved housing counselor can sit on that call with you, free.

5. Keep it with a loan modification

   A lasting change in income and a wish to stay points at a modification — the lender changes the loan itself, by term, rate or the arrears being moved to the end, so the payment fits what is coming in now. It is paperwork-heavy and it is slow, so start it before a sale date exists, not after. First step: ask the servicer for the full loss-mitigation application and send everything it asks for in one go. If the payoff letter says a sale would clear the loan, a traditional sale stays on the table too, and it protects what you have built.

6. Without a hardship, a short sale is unlikely — look at a sale that covers the gap

   Lenders approve a short sale because the alternative is a foreclosure that costs them more. Somebody current with no hardship is not that case, and the application asks for one. The honest doors are a traditional sale where you bring the difference to closing, holding the house and renting it until the numbers move, or waiting. First step: get the payoff letter in writing so the gap is a number rather than a worry, then talk it through.

7. Get the payoff letter first — it decides everything else

   You are ready to move and there is a hardship, so the only open question is whether a sale clears the loan. That is one phone call: ask the servicer for a written payoff letter, which lists the balance, the arrears and the fees. If a sale would cover it, this is a traditional sale and nothing needs approving. If it would not, come back here and answer again — the short-sale and deed-in-lieu paths are below, in full.

8. A deed in lieu — hand the lender the keys, in writing

   One loan, a payoff a sale would not reach, and no wish to market the house: a deed in lieu of foreclosure is the lender taking the title back by agreement instead of at a trustee’s sale. Many lenders require a short sale to be tried first, and the agreement must say in writing whether the remaining balance is forgiven — that sentence is the whole document. First step: ask the servicer for its deed-in-lieu requirements, and have a Tennessee attorney read the agreement before you sign it.

9. A short sale fits — and every lienholder has to agree

   Ready to move, a real hardship, and a payoff letter a sale would not reach: this is the case a short sale exists for. The lender approves the sale and accepts less than it is owed; where there is a second mortgage, an HOA lien or a tax lien, each of those has to agree too, which is where most short sales are won or lost. Get in writing whether the remaining balance is forgiven, and ask a CPA what a forgiven balance means on your return. First step: ask the servicer for its short-sale package while the house is listed with somebody who has closed one — the approval runs on the lender’s clock, not the buyer’s.

General information, not legal or tax advice. A short sale, a deed in lieu and a foreclosure each carry questions about any deficiency and about forgiven debt — talk to a Tennessee attorney and a CPA before you sign anything. A HUD-approved housing counselor is free and works for neither the lender nor us.