Flights of Fancy Mom

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Single Mom and a Short Sale

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I mentioned in a previous post here that I recently moved from Delaware to Pennsylvania. I had a home that I was paying a mortgage on and had to take care of that before I moved. I knew I couldn’t sell the home. I had lost WAY too much money on it.  I bought the house back in ’09 for $135k.  It was a small, 950 sq ft row home in, not quite the best area.  But, I was determined to show my daughter that her single mother could do it on her own.

I tried to rent my home out. I am not the type of person who just gives up on her debt and walks away. I had quite a few interested people come out to see the house.  I advised each and every one of potential renters that I would be doing a background and credit check.  I didn’t want to get stuck with a renter who was habitually late on payments.  As a single woman, I didn’t have the money to cover my mortgage and my rent. Long story short, I didn’t find a suitable renter for my home.

As I wasn’t able to find a renter, I started looking at other options.  Those included a Deed in Lieu or a Short Sale.  It was not as easy a decision to come to as I just made that sound.  Before I started the process, I had so many anxiety attacks. But, I had to make the decision.  Or stay where I was and remain a weekend mom. That was not really an option.

A few years ago, I had to go through the process to get a loan modification.  I was laid off from a job in the student loan industry and my new job later that year, the salary was so low, that I couldn’t afford my mortgage with just the one job. I had taken over $800 a month pay cut.  So, with that loan modification, FHA had taken off $22k of my mortgage and lowered my mortgage payment by $300 a month. But, I would have to pay that $22k back if I sold the house or paid it off.

Even with that modification and the resulting lower mortgage amount, I still owed $102k on my home.  After I started the process, an appraiser had to come in to get the home value. My home was valued at $70k. That was $32k under what I owed!  If you take everything into account. The $22k removed and my $7k that I put down as a down payment, I lost over $60k in value on this house.  I was devastated.

I had decided to do a Deed in Lieu. I was ready to resume custody arrangements of my daughter and start over.  I reached out to a realtor per the banks instructions. He happened to be someone who went to my high school. I saw how he interacted with people on Facebook and felt he would be the best person to help me. Boy, was I right!  I talked with him and he talked me out of the Deed in Lieu.

What the bank didn’t tell me about this option? It is a voluntary foreclosure. He went over the difference between the Deed in Lieu and a Short Sale with me.  He advised that they take almost the same amount of time, but, a Short Sale doesn’t have as long of a lasting impact on your credit. The bank may not tell you that because the Deed in Lieu is easier for them. You’re signing everything over to them and walking away. They aren’t going to tell you that it will be more devastating to your credit because they don’t care about that aspect. It doesn’t affect them, so, why would they care?

It took a month and a half for the bank to approve the short sale. This is after sending many sheets of paperwork to them. You will need to include for their review:

  • A financial worksheet. You will need to list all of your expenses on this sheet.
  • A hardship letter. Your hardship must be financial, death or divorce. Mine was moving to another state for custody of my daughter.
  • Tax information.  They will need the last two years tax papers.
  • Proof of Income. You will need to provide your last two pay stubs as well as your bank statements for them to see if you have other forms of income coming in. If you have more than one bank account, you will need to send copies in for all of your accounts.
  • Authorization Letter. This gives your realtor and their assistants, or short sale expert (if they have one on staff) permission to speak on your behalf.

After all that, my house was listed for the $70k that it appraised for. I had quite a few offers within the first week!  But, for this process, the house has to remain on the market for 15 days.  So, on the 16th day, I signed the best offer received.  This was done mid-February. My buyer had the stipulation that if the closing didn’t go through by the end of April, they could walk away with no consequences.  We figured that’s not an issue. That was over two months away.

For those of you considering a short sale, BE PREPARED!  It is a long, drawn out process.  The bank and FHA will do everything (it seemed to me) to find a way to keep the process going as long as they can.  At one point, FHA actually denied my request, AFTER it was approved by the bank. Saying that my hardship didn’t fall within their parameters.  Technically, it did and it didn’t. I was resuming my custody arrangements due to a divorce, but, the divorce happened 10 years prior. We submitted an appeal and they approved it the second time around.

Settlement was arranged, but, the bank waited until the day before to say they were JUST THEN reviewing the final paperwork.  Umm, what?  Settlement is arranged, YOU agreed to the date! They then said, “Don’t worry, we’ll get the paperwork done before settlement. Go ahead.” Well, two days later, I had to re-sign paperwork for a matter of a few cents because even after they said to go ahead, it took another two days for them to let the buyer go to settlement.

All in all, I started the process mid-December, my settlement didn’t go through until the first week of May. (Thankfully the buyer stuck with it past their April 30th deadline!)  So, almost six months.

During that time, I was making rent payments to my new home, and wasn’t making my mortgage payments. Apparently, the departments within the bank do not talk with one another, and I kept getting those scary letters saying that HUD will be reaching out to me about foreclosure. This was even after they approved the buyers bid to buy my home!

I mentioned before about my credit score. It’s very important to me.  When I started the process, my score was approximately 750.  With this short sale, and me not making my mortgage payments, per the score I get every month from being a Discover Card customer, I lost about 100 points. So, I went from excellent, where lenders view me favorably, to fair, where lenders may still loan to me.  The lawyer I had settlement with, said I will most likely have my score back within a year and a half. At this time, I’m not in need of a credit card, my car is only two years old, so, I won’t need a new car anytime soon. I’ll continue making my payments as I have and my credit will be rebuilt.

Now, I honestly am NOT recommending a short sale if you can avoid it at all costs.  There were many tears shed and anxiety attacks due to frustration and stress. That was absolutely, the longest six months of my life. I understand that the bank and FHA can’t make it easy for the home owners. Otherwise, everyone and their mother will do it. But, most of my frustration and stress came from the lack of urgency they felt. As the seller, I was trying to hurry the process. As the bank who stands to lose all that money, they were in no hurry at all.

So, as the end result, I was able to walk away from my home. My credit didn’t take as much a hit as I thought it would. I had also put in my hardship letter that when this short sale is over, I want no deficiency reported to my credit report.  That affects the score more if it looks like the bank can come back to you and tell you they need more money from you. So, a short sale with no deficiency is the best you can hope for.

When I move again, after my daughter graduates high school, I will be able to buy again. I won’t have to wait ten years. And that’s IF I choose to.  I may decide renting is better after all this!  At my age, I’ll most likely never finish out a mortgage anyway, lol. Besides, I want to travel and work from the road, so, I think an RV home is in my future.

Have any of you done a short sale?  What was your experience?


  1. Karen Clough

    This all sounds quite different from what we experience in the UK but I do remember it taking months and months to finalise our house sale and found it very stressful so i do sympathise. Hope you get it all sorted!
    Karen Clough recently posted…In The Kitchen with GBBO Legend, John WhaiteMy Profile

  2. Alli Smith

    I’ve never done a short sale, but I always DVR House Hunters and I’ve actually learned a lot about short sales from watching TV. I’ve seen how long and drawn out the process can be. Thankfully, you’re finally done with it and can move on. What a daunting process!

  3. Paula Schuck

    Short sales are so difficult to navigate. You really do need a professional to help you navigate the waters.

  4. Jenn @ EngineerMommy

    I haven’t done a short sale, but I know they can be really complicated and time-consuming. It’s important to have a professional that helps you get through the whole process smoothly.

  5. Vera Sweeney

    I had no idea this was an option!!! What a hard decision to go through but I am sure this is what will work out best for you and your child long term.
    Vera Sweeney recently posted…It’s Been A While… Here’s A Personal UpdateMy Profile

  6. Amanda @bephoenixfit

    That all sounds so stressful! I’ve never had experience with a short sale, but I have heard of it. I think it’s pretty awesome that you were strong enough to make it through all of that.

  7. Dee

    Thank you so much for sharing this information. I have been looking to buy my first home and could really use the information that shared when I decided I want to move.

  8. Pam Wattenbarger

    I have never done a short sale and actually didn’t know anything about them until reading this post. This was really informative about short sales and deed in leues.

  9. Brandy

    I had a foreclosure as a single mom. I felt like such a failure. It was horrible and it still hurts my credit today. Sigh. I am glad you were able to do the short sale option, I really have heard it’s better than what I went through with a foreclosure.

  10. Bella

    I have never been a part of a short sale and after hearing your experience, I will avoid it at all costs. I am sorry you had such a hard time with your sale.

  11. Dawn McAlexander

    I had heard of short sales, but I didn’t know exactly what they were. I appreciate the explanation. I always wondered what the need was for a short sale.

  12. Jeanine

    That sounds so awful. With my anxiety I would seriously lose my mind. I can’t believe they waited until the day before, and such. That is awful. I’ve never known about short sales and never heard of the Deed in Lieu before. Great info, for the future in case needed.

  13. ricci

    I have heard about how drawn out short sales are, but only from the buying end. I never considered how long it takes on the seller’s end. My goodness!

  14. Chubskulit Rose

    I had this fear when we were about to list our old home but glad it worked out for us. Sorry that you have a hard time with yours.

  15. Bonnie @wemake7

    Wow, that sounds so stressful. I’m glad that you were able to sell your home though.

  16. Dana

    I haven’t done a short sale personally, but have a lot of friends and acquaintances that have gone through the process. I’ve heard that it requires a lot of work and time but there are times it is a necessary evil. I’m glad your short sale has gone through and you can start new!

  17. rika

    Thanks for sharing your personal story and experience. Sounds pretty stressful,.. I have never done any short sale. I am sure its very stressful and time consuming,

  18. Anosa

    I didnt even know what a short sale was until I read your post, thanks for sharing your story. I don’t own a home yet as I am renting but hope to buy one next year
    Anosa recently posted…{November} Sunday CurrentlyMy Profile


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