The Carrington Short Sale Guide

If you’re having trouble paying your mortgage, Carrington Mortgage is your servicer, and you want to avoid losing your home in foreclosure, a short sale is a good option. With a short sale you sell your home for less than you owe on the mortgage, and Carrington Mortgage agrees to accept that amount. This article will help you understand how to start a short sale, why it might be a good choice, and what you need to think about before you do it. Selling your home in a short sale can help you move on without a big debt hanging over you. Let’s look into how to do this with Carrington Mortgage and make a fresh start.

Why Do a Short Sale Instead of Something Else?

Loss mitigation is the name of the different ways that lenders offer to help borrowers who have trouble making their regular mortgage payments. Lenders offer things like repayment plans, or modifications that change the terms of the loan to make it more manageable. Carrington Mortgage’s solutions can vary depending on your situation.  Any changes made to the loan terms are reported to credit bureaus, and that can harm your credit score. Even though seeking help might have an impact on credit, it’s so critical for borrowers to reach out to their lender and explore the options available to avoid losing their home. Good things happen when you act quickly. While your options will affect your credit score, it’s better to deal with financial challenges promptly rather than risk losing the home.

A Short Sale is an option where you sell your property for less than what you owe on your mortgage, with lender approval. This option helps lenders recover some of their losses without going through the lengthy and costly foreclosure process. You then avoid defaulting on your loan. All offers are subject to lender approval., While going through the short sale process may have an impact on your credit it’s less severe than foreclosure. When you complete your short sale with Carrington Mortgage, it will be a few years before you can get another FHA loan.  But, in Illinois at least, all the debt you owe will be wiped out.

Why An Attorney is So Necessary — Carrington Has Not Played Fair in the Past

While Carrington Mortgage Services is known for offering a wide range of mortgage products, it has faced regulatory action in the past. Just recently, in November 2022, the Consumer Financial Protection Bureau (CFPB) took action against Carrington for not properly implementing protections provided under the CARES Act for borrowers experiencing financial hardship due to the COVID-19 pandemic. They essentially just prosecuted poor people who had problems during the pandemic! They were hit with violations like misrepresentations about forbearance options, illegal late fees, and inaccuracies in credit reporting. The CFPB’s order required Carrington to conduct audits, refund improperly charged fees, assess customer service staffing, provide relevant training, establish policies to prevent recurrence of such issues, and pay a civil penalty of $5.25 million​. Maybe if you’re going to deal with a company that is so greedy, you’ll need some help.

Starting a Short Sale with Carrington

Ask an Expert if the Short Sale is the Best Option

Before you begin, try to speak with a qualified short sale specialist or experienced real estate agent to figure out if a short sale is right for you. These professionals know a lot about how short sales work and can give you advice that fits your specific situation. When you talk to a specialist or agent, you learn about the good and bad parts of doing a short sale.  Maybe there are other options with Carrington Mortgage that might be better for you. Expert knowledge can help you make smart choices and handle the complicated process of a short sale with confidence.  Doesn’t hurt to ask!

List the Home

To start a short sale, you need to list your property for sale, usually at a price lower than what you owe on your mortgage. When you list, you will attract potential buyers who are interested in buying your property despite the lower price.

Nearly all short sale regulations prefer to see a property that has been listed for a public sale.  The Bank would like to know that you gave people a chance to buy the property at full price before there was a short sale.  You should attach a copy of your signed listing agreement with a licensed real estate agent.  Good photos, honest disclosures and a reasonable price go a long way.

Your real estate agent will leverage their marketing expertise to attract qualified buyers for your property. The goal is to find a buyer willing to offer a price close as close to the market value as possible.

When you list the property, you increase the chances of finding buyers who want a good deal or investment opportunity. If you get really lucky, you can also speed up the sale process, potentially reducing the time it takes to find a buyer. Sometimes, in special markets, you can manage to sell the property and walk away with some money.

Get a Good Short Sale Offer

Once you receive a good offer for your property, the next step is to submit it to your lender for their review and approval. This is the make or break stage in the short sale process.  Here, you provide all the necessary details of the offer to your lender, including the proposed purchase price, terms, and any additional conditions stated in the sales contract. Then, the lender will carefully evaluate the offer to determine if it meets their requirements.  If you meet the math, they will accept it.

Carrington Mortgage will consider factors like the current market value of the property, the outstanding mortgage balance, and the potential losses or gains from accepting the offer. After the company thoroughly assesses the offer and gives its approval, you can proceed with finalizing the sale and moving forward towards closing. Make absolutely sure that you maintain open communication with Carrington Mortgage throughout this process to address their concerns and to get your sale approved.

Is a short sale good for the buyer?

The price of the home may be lower than its market value. Usually, the house is in better condition than those purchased at foreclosure auctions or afterwards. Buyers can usually perform regular inspections and title searches, with specific periods for conducting thorough research. Another party often covers the closing costs and broker’s fees.  It’s a pretty sweet deal.

Submit Carrington Mortgage’s Requested Documents

After the offer is approved, it’s time to gather a complete short sale package. Carrington’s short sale package consists of different financial papers like bank statements, tax returns, income statements.  Carrington also wants, a detailed letter explaining your financial difficulties, and whether they are ongoing. Additionally, they will want any documents about the property’s condition or history for a fuller understanding. We’ve attached their very, very helpful checklist on which documents you should prepare.

Step One – Complete Loss Mitigation Application Document Requirements.

Next Steps in Your Short Sale Application:

• Request for Mortgage Assistance (RMA)
• Third- Party Authorization  – Required only if you want to discuss your request for a Pre-Foreclosure Sale or Short Sale of your property with a third party acting on your behalf, such as a real estate agent or attorney
• Contact information
• Listing Agreement – Provide a copy of the current listing agreement with your agent/broker.
• Purchase Contract.   Provide a copy of the purchase contract signed by the buyer and the seller that contains language that the sale is contingent upon approval from Carrington Mortgage Services.
• Closing Disclosure – Provide a copy of the seller’s closing costs or Closing Disclosure. The figures in these statements must be accurate because our approval will be based, in part, on this information.  Closing attorneys like us can do it for you.
• Buyer Pre-Qualification or Pre-approved Letter showing they have the funds to complete the purchase.

Negotiate the sale terms with Carrington Mortgage! Everything in your transaction, such as the price, closing costs, closing timeline, and any conditions or requirements are all negotiable. When we are by your side, we protect your rights during the entire process. We provide valuable guidance, review the terms of the agreement, and help you understand any legal implications. Both sides will go back and forward at length, making multiple offers and counters to arrive at the best price for sale. You could start at $200,000 and end at $140,000 on the same transaction. Thirty percent jumps are not uncommon.

Carrington Mortgage Service’s Appraisal Guidelines

Once you and Carrington Mortgage agree, the next step is to arrange for a property appraisal. This is usually free for you because the Bank pays a real estate broker to do it. The appraisal, sometimes known as a BPO, helps determine the current market value of your house. Even if you receive offers from buyers, the buyer(s) may still change their minds before the closing date. So, keep your house listed for sale and keep promoting it to attract more potential buyers until cash is in your hands. This way, you have a better backup plan in case any offers fall through. Short sales are all follow through and follow-ups.

Closing a Short Sale with Carrington Mortgage

After the lender approves the short sale, it’s time to complete the deal and close the transaction. We wrote an article on this for you. Your remaining mortgage balance will be satisifed by the sale. This helps you clear your debt with the lender and frees you from any more mortgage responsibilities. Closing the deal is the final step in the short sale process, giving you a chance to begin anew with your finances. You walk away clean, and owe nothing to any bank.

When you’re ready to explore your options with a Carrington Mortgage short sale, give me a call. Don’t navigate this journey alone! Give me a call, and let’s discuss how we can work together to avoid foreclosure and make a fresh start. Whether you’re just starting to consider a short sale or you’re deep in Carrington’s maze, I’m here to help. Contact me now, and take the first step towards easing your financial burdens. Let’s tackle this challenge together!