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Homeowner Information

What is a Short Sale?

A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off all (or a portion of) your mortgage balance with the proceeds and avoid foreclosure. If Fannie Mae is the first lien holder, we work with the mortgage company that services your loan (i.e. collects your mortgage payments) to communicate with you throughout the short sale process. We provide guidance to the servicer on who is eligible for a short sale, the property listing price, and acceptable contract terms and closing costs.

In addition to avoiding foreclosure, short sale benefits include:
  • Eliminate remaining mortgage debt.
  • Assistance for relocation may be available for $7,500.
  • Start repairing your credit sooner than if you went through a foreclosure.
  • May be able to get another Fannie Mae mortgage to purchase a home sooner (in as little as 2 years) than if you went through foreclosure (up to 7 years).
  • Avoid foreclosure.

The Steps a Homeowner Should Take to Pursue a Short Sale

If you decide that a Short Sale might be the best option for you, there are some critical steps you should take:
  1. Go to Fannie Mae’s Loan Lookup Tool to confirm that Fannie Mae owns your loan.
  2. Contact your mortgage servicer or a Fannie Mae Mortgage Help Center immediately and tell them you are interested in a short sale and want to see if you qualify and determine what, if any financial information you may need to prepare. If required, gather your financial and loan information and be prepared to share:
    • mortgage statements, including information on a second mortgage (if applicable)
    • other monthly debt payments (e.g., car or student loans, credit card payments)
    • and your income details (paystubs and income tax returns)
  3. Explain your current situation (i.e., why you are having trouble making your mortgage payment or why you anticipate having problems making your payments in the near future). You may be asked to provide information to support your hardship. This can include:
    • Medical bills
    • HOA Liens
    • Disability Statements
    • Unemployment Benefits or Status
    • Divorce Decree
  4. Contact a licensed real estate agent who is experienced in short sale transactions and explain that you are interested in listing your home for sale.
  5. To obtain a recommended list price and assistance throughout the marketing process, have your agent submit a List Price Guidance Request in HomePath. As part of this process, an appraiser and a real estate professional will visit your home and assess its value.
  6. Authorize the release of information about your loan and other relevant information to your real estate agent by signing the Fannie Mae Homeowner Authorization form. Keep your real estate agent informed of all communication relevant to the short sale, including information from your mortgage servicer, courts, etc.
  7. Provide access to the property for an interior valuation if required. Any delays in homeowner response or inability to gain access to the property will delay receipt of a recommended list price from your mortgage servicer.
  8. Be patient and realize that selling your home as a short sale will most likely take longer than a typical real estate transaction. This real estate transaction is not just between you and the buyer. It also requires the approval of the mortgage company and all involved stakeholders.
  9. Be informed about the benefits and consequences of a short sale.

Listing Agents Responsibilities in the Short Sale Process

Determining Eligibility
  • Assisting homeowner in determining who owns their loan.
  • Contacting the mortgage servicer to express the homeowner's interested in pursuing a short sale.
  • Working with homeowner to gather and submit all required documents.
Listing the Property
  • Requesting list price guidance and listing the property as "Active" in the MLS based on the listing price guidance.
  • Marketing the property to receive the highest exposure for the listing.
Submitting an Accepted Contract
  • Submitting "highest and best" accepted contract to the servicer or to Fannie Mae (if applicable).
  • Providing a fully executed purchase contract with required contract clauses for a short sale.
  • Submitting estimated net sheet or HUD-1 settlement statement.
Negotiating and Counter Offers
  • Negotiating offers on behalf of the homeowner including sending out and responding to counter offers.
  • Providing any additional or supporting documentation requested by the servicer and/or Fannie Mae.
Closing and Settlement
  • Work with lender, the homeowner, the buyer's agent and the buyer to facilitate the closing.
  • Coordinate the home transfer with the homeowner, buyer, and buyer's agent.

Who is Involved in the Short Sale Process

Fannie Mae's Role in the Short Sale Process

If Fannie Mae owns your loan, we work with the mortgage company that services your loan.

The Servicer's Role in the Short Sale Process

The mortgage servicer handles all borrower interactions and the borrower eligibility process.

The Real Estate Agent's Role in the Process

Both the listing and buyer's agent represent and assist sellers and buyers in the short sale process.

Important Things to Remember

  • The sale of your home must be an arm's-length transaction, which means the parties involved are not related or affiliated by family, marriage, or commercial enterprise (business partners).
  • If the foreclosure process has already begun on your home, pursuing a short sale does not automatically suspend the foreclosure process.
  • There are possible tax consequences if any portion of the outstanding debt is forgiven. Make sure you seek legal and tax advice so you are not surprised and can plan accordingly.

Equal Housing Opportunity

IT IS ILLEGAL TO DISCRIMINATE AGAINST any person because of race, color, religion, sex, handicap, familial status, (having one or more children), or national origin.

  • In the sale or rental of housing or residential lots.
  • In advertising the sale or rental of housing.
  • In the financing of housing.
  • In the appraisal of housing.
  • In the provision of real estate brokerage services.
  • Blockbusting is also illegal.

Anyone who feels he or she has been discriminated against should send a complaint to: U.S. Department of Housing and Urban Development, Assistant Secretary for Fair Housing and Equal Opportunity, Washington, D.C. 20410.