The ABC’s of selling your Birmingham house in a short Sale

The ABC’s of selling your Birmingham house in a short Sale

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Should you sell your Birmingham house in a short sale if you do owe a mortgage company and cannot pay the full mortgage loan each month? Some Birmingham residents may be surprised to learn having a short sale does not mean you still get to keep your property and you will not have to move from your house.


How do you keep a mortgage company from coming after you for full mortgage payment? The only way to avoid a mortgage company from suing you after a short sale; known as a deficiency, is to have a waiver on your short sale stating the mortgage company will not collect on a deficiency after the sale. In Alabama, lenders do not need to go through the court system in order to get a get a foreclosure. It is a non-judicial state and each state varies in how foreclosures are completed.


Four types of short sales


Did you know there is no such thing as simply a short sale? No matter whether you live in the Oak Mountain neighborhood or the popular Hollywood Hills, there are four types of short sales. Many times, when a Birmingham resident says short sale, they mean a traditional short sale. National housing markets are on the mend after the economy caused the housing market to start to nosedive as early as 2007. Since then, Birmingham’s housing market has improved to a 71.1, beating out Alabama’s overall average of 70.8. Some Birmingham residents have found themselves underwater in their mortgages, meaning their houses are valued at less than their mortgages. In a short sale, many sellers may think they can sell their house fast. In a traditional short sale, the process can stretch into a year.


Birmingham residents may have other alternatives, including the Government’s Home Affordable Foreclosure Alternative, a Fannie Mae HAFA short sale, and a Freddie Mac HAFA short sale. There are advantages if any residents living in Pelham, Vestavia Hills, Red Mountain, etc. choose a Government HAFA short sale. For example, residents would receive $3,000 that they can use to relocate. While eligibility is decided for a homeowner, a foreclosure must be suspended and sellers cannot be required to sign a note or pay additional amounts on liens. There are guidelines sellers are required to follow, such as signing a Hardship Affidavit.


How Fannie and Freddie Mae HFFA sales differ


Do the rules change if Fannie Mae or Freddie Mae is your mortgage lenders on a HAFA short sale? Fannie Mae follows the government guidelines, for example, with a few exceptions. A home cannot be vacant for more than 90 days and the mortgage cannot exceed more than the borrower’s gross income. Fannie Mae also handles the process differently for lien holders who are behind in payments. Lien holders can lease the home back from Fannie Mae at below market rent if Fannie Mae holds the loan.


Freddie Mae has some of the same requirements. Borrowers must make sure mortgage payments do not exceed 31 percent of their gross income and continue to make payments equal to 31 percent of their monthly income. The biggest difference is sellers must have HAFA approval before they receive a contract.


Should you risk trying to get approval or walk away?


Before you make a decision about if you should do a short sale or walk away from your home and let the bank take back the property in foreclosure, talk to a real estate company that specializes in doing short sales. A short sale agent who has experience can guide you through the short sale process and help you find the right buyer. A lender will look at your financial statements. Who your lender is may also be a deciding factor on whether you qualify for a short sale in Birmingham?


Should you walk away from your home, without having a short sale? For some Birmingham residents, it is stressful going through the short sale process and meeting all the requirements. Many may not want the stress. Having a short sale; however, allows Birmingham residents to choose who buys their home. Many former homeowners also want to avoid ruining their credit and want to forego paying a deficiency judgement. Rest assured, in a short sale, it is illegal for Birmingham buyers of any short sale to give the seller less than fair market value. A buyer cannot do this and try to cause a borrower to pay more than what they might otherwise owe in a deficiency judgment. Do you need help selling your house? Please visit us at We can buy your house fast and you can avoid stressing through the process. We are here to help you through the process.

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