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Understanding the power of short sale agreements

Navigating the language associated with Connecticut mortgage agreements might be challenging for those unfamiliar with real estate or finance. This challenge is compounded if the need for understanding comes along with a stressful situation, such as a bank compelling a homeowner to satisfy debt agreements. Regardless of the situation, it could benefit mortgagees to know their options. Here is some information on the loss mitigation process, one such alternative to formal foreclosure.

The United States Consumer Financial Protection Bureau lists the definition of short sale as a type of loss mitigation that involves the mortgagor allowing a mortgagee to sell a property for less than amount remaining on the mortgage. The negotiation process surrounding these types of sales might be complex: It typically involves all stakeholders in a debt. The agreement between the parties commonly sets an acceptable sale price and makes conditions for any future responsibility, or lack thereof, on the part of the debtor.

While negotiations can be complex, the power of the court is relatively straightforward with regards to short sales. The Connecticut Judicial Branch guide to foreclosures states the following limitations on facts set during loss mitigation hearings:

  • Recognizing market values through appraisals
  • Determining good faith status of the proposed transaction
  • Identifying the status of the mortgage
  • Noting other debts levied against the property
  • Finding total amount owed on the property

The Judicial Branch also mentions that homeowners pursuing short sale should satisfy some financial requirements. As such, prospective sellers often review their own financial situation thoroughly before pursuing formal loss mitigation.

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