The loss mitigation department of your mortgage lender is charged with handling short sale properties. During a short sale, you will be selling your property to an interested buyer for less than the amount you actually owe on your mortgage. Short sales are thoroughly investigated by the mortgage company and the process can be long an arduous, but the result is that you, your mortgage lender, and your buyer each gain something from the deal. Short sales are one of many ways of stopping foreclosure of your home.
Many loss mitigators are paid a bonus related to how many defaulted loans they are able to clear from the mortgage lenders books. With this in mind, the mitigator assigned to your case is as motivated to approve the short sale as you are, assuming it is in the best interests of the lender. Before they approve the sale however, you, and your buyer, will probably be required to submit a mountain of information to help the mitigator determine the value of the sale.
After you have submitted all of the documentation the lender asks for to determine the viability of your financial situation; documents such as a hardship letter, paystubs, medical bills, bank statements, and any other evidence that proves your predicament; and, assuming that the lender agrees that you are likely to be unable to repay your loan, the mortgage company will order what is called a brokers price opinion.
BPO (Broker’s Price Opinion) is Key to a Short Sale
The Broker’s Price Opinion, or BPO, is the process which gives the lender an idea of the market value of your house. This is one instance where you want the value of your home to be low. If the broker’s price opinion is high, the mortgage lender may elect to foreclose on you home and put the house on the market themselves, where your property will be snagged up by home foreclosure buyers. So, the lower the BPO, the more likely it is that your lender will approve the short sale.
Finally, your buyer will need to submit documents indicating the costs involved in the sale and where financing for the sale is coming from. After they have reviewed all of the required documentation and determined that a short sale is in their best interests, the lender will give permission for the sale. Although the process is long, frustrating, and somewhat intrusive, you avoid foreclosure, your mortgage lender gets the best deal they can, and your buyer gets a home for less than market value.