A short sale is an alternative to a foreclosure on your property when you are behind on your mortgage payments. Though a short sale is possible when you have multiple mortgages on one property, the process becomes more complicated.

What Exactly Is a Short Sale?

A short sale is a sale of a property for less than the remaining balance on a mortgage. Upon the sale, the lender agrees to the proceeds in exchange for releasing the mortgage lien. As such, releasing the mortgage lien will prevent foreclosure.

What Is the Short Sale Process with One Mortgage?

To start the short sale process, the homeowner-borrower must negotiate with the lender for a short sale. Once the short sale is approved, the homeowner-borrower must submit to the lender a loss mitigation application. Lastly, the homeowner-borrower must find a buyer for the property to complete the transaction.

What Is the Short Sale Process with Multiple Mortgages?

When there are multiple mortgages on a property, the short sale process is more complex. Multiple mortgages include tax liens, second mortgages, and home equity line of credit.

In order for a senior lien holder to successfully approve of a short sale, the senior lien holder must notify the junior lien holders and get them to relinquish their interests. However, the junior lien holders do not have any incentives to do such. Thus, to convince the junior lien holders to do such, the senior lien holder comes forth with a compromise to give the junior lien holder a portion of the short sale proceeds.

Do I Need a Foreclosure Lawyer?

An experienced foreclosure lawyer can help you negotiate a deal with both senior and junior lien holders. Without such, your property will be foreclosed upon and the foreclosure will negatively affect your credit.