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Short Sale Process in Florida Has Many Hurdles

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To get your lender to approve your short sale, there are a number of documents that your lender is going to want to see from you. It's not enough that you've missed payments,

the lender is going to want to see that you cannot afford to make the mortgage payments. They will request pay stubs and bank statements.

They are also going to look into other assets that you may have, especially other real estate. If you've recently purchased another property, locally, especially for cash, they are unlikely to approve your short sale. 

Once you've overcome the hurdle of qualifying on your own finances, you have to then look at the other liens on your property. Many people have second mortgages, unpaid taxes, and Homeowner Association Dues plus legal fees on top of that. All of these items must be paid as part of the short sale, and will lower the net amount that the lender will receive. The lender will have to approve each of these items.

Second mortgages will generally be offered somewhere in the range of $3000-$6000. Most second mortgages will accept this amount if all the equity in the property is taken up by the first mortgage. Past due taxes will generally be paid in full by the short sale lender, as they would have to pay them anyway if they were to foreclose.

Past due association fees can become a point of contention, especially if there are more than a year of fees due and legal costs on top of that. Legal costs can easily add thousands of dollars to the past due association amount. If a lender were to foreclose they may be eligible for a 'safe harbor' provision in the statutes that caps the amount owed by a bank to 1 year of association dues. However, this does not apply in a short sale, and most association attorneys will not reduce their fees. This can leave a gap between the amount the association is owed and the amount the lender is willing to pay. This amount will have to be come up with if the transaction is going to close. These funds can come from the Seller, Buyer, the agents or a third party.

To discuss additional short sale stories, issues and problems, check out MyShortSaleNightmare.com

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