Sam W. Abraham, ePRO, GRI, ABR, AHWD
Helping our community grow one HOME at a time
Office: (602) 943-3000 – (480) 797-8684    Fax: (480) 223-6421
Mortgage Short Sale

Who Qualifies? And How?

Most people facing foreclosure or a financial hardship who cannot sell their home for what is owed will qualify. However, each Lender and Loan Type has a different set of requirements. This information can be found on a current mortgage statement or the settlement papers from your closing. If you do not know the loan type and lender, be sure to give your agent authorization to call your lender.

In General, to Qualify you must simply:
  • Be experiencing a True Financial Hardship
  • Be in default or imminent on your mortgage
  • Facing imminent default while in a ‘Must Sell’ situation
  • Have no Equity in your home
  • Have no available assets
  • Have a lender and loan type with a clearly defined short sale process

So, What Do You Need to Do?

First and foremost, get your property listed for sale at fair market value. Your Lender will require copy of a Listing Agreement. Your Lender wants to see that you have made a good effort to sell your home.
How do you do that? Click here to fill the Sellers Request Form and have one of agents contact you immediately to initiate the process.
It is also a good idea to familiarize yourself with the Arizona Short Sale Seller Advisory, which is a resource for Real Estate Consumers Provided by the Arizona Association of REALTORS®.

The Paperwork List

Your Lender will require the following:
  • Handwritten Hardship Letter: Explain your situation, when it started, how it happened  and what you are doing to fix it
  • Financial Worksheet: Your budget including everything that costs you money on a monthly basis
  • 2 Years Most Recent Tax Returns: Complete with W-2s
  • 2 Months Recent Bank Statements: All accounts and all pages
  • 2 Most Recent Pay-Stubs: Or, if unemployed, a statement stating such
Your Agent will require the following:
  • An Authorization to Release Information to your Listing Agent
  • Copy of recent mortgage statement(s)
  • Copy of any correspondence received regarding the property from attorneys, lien holder(s), bankruptcy trustee, or probate
  • Any paperwork regarding any other liens and/or judgments
  • Property tax records
  • HOA information

Help Sell Your Home

Short Sale success will be easier if you assist with the process:
  • Allow showings
  • Keep the home show-able
  • Stay available for your agent
  • Stay in communication with your agent
  • Cooperate with marketing efforts
  • If vacant, leave on utilities (if possible)

What to Expect?

The Process could take weeks or months to complete. Patience and Communication are the keys to success.


Here are some of the most frequently asked questions regarding the short sale process, its tax implications, and its effect on credit:

How much time do I have?  Do I have to start now?

It is best to begin a short sale when you realize you can no longer afford the mortgage, so that your property can be marketed properly and you can receive a high offer. The earlier you start, the higher our likelihood of success.  Remember that your lender requires a purchase offer to review your eligibility for a short sale and it make a few weeks to get a solid offer.

Do I need to be in default to qualify for a short sale?

NO, more and more lenders are considering short sale requests from homeowners who are not in default.  However, you must be experiencing a financial hardship that points to imminent default if you are unable to sell.

What will happen If I do nothing?

If you do nothing and are not making your mortgage payments, your lender will foreclose.  You will have a foreclosure on your credit report, be liable for any deficiency, and/or subject to a taxable event.

Will I get any money when the property sells?

NO, for the majority of loan types you are not allowed by your lender to receive any proceeds from the sale of your home.  If you have an FHA loan, you may qualify for their pre-foreclosure sale program that does have a selling incentive.

What if I file bankruptcy?

Filing bankruptcy will not stop the foreclosure process, just delay it.  The property will eventually be discharged from bankruptcy protection and be back in the foreclosure process where it was when bankruptcy was filed.  For further bankruptcy information, please seek the advice of legal counsel.

What is better on my credit – Foreclosure or Short Sale?

Please consult your own financial advisor or the credit bureaus directly for the answer to this question.  From experience only, we can say that foreclosure is much more damaging to your credit.  A short sale will most commonly be listed as “settled debt” and is much less harmful to your credit.

Will I be liable for my lender's financial loss?

Depending on your situation you may or may not receive a deficiency judgment or taxable event.  It is best to consult an attorney for advice regarding any debt liability.
Now, there have been recent changes in the law that reduce homeowner tax liability.  The site for that information is,,id=179414,00.html Most tax consequences have been done away with for primary loans on primary residences.

Regarding deficiencies – you can have your agent request in the negotiations a full release of lien and that your lender consider the debt settled or satisfied.  The bank has the right to ask you to sign an unsecured note or to ask you contribute money at the time of closing.  Be sure your agent negotiates the best outcome for you.

What other advice should I seek?

Be smart. Always seek professional advice from a qualified attorney and an accountant specializing in Short Sales/Pre-Foreclosure Sales.

What about the federal government bailout programs?

To determine your eligibility, please visit

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Sam W. Abraham Realty
536 E Dunlap Ave Suite 11 • Phoenix, AZ 85020
Office: (602) 943-3000 – (480) 797-8684 • Fax: (480) 223-6421