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 Federal Government Short Sale Conditions:
The borrower and co‐borrower, if applicable (“Borrower” or “you”), of the above loan contacted the Servicer
(“Servicer” or “we”) because your mortgage payments are no longer affordable and you would like to avoid
foreclosure. After listing your house for sale, an offer was received. However, the sale may not be sufficient to pay
off the loan. This is a Request for Approval of a Short Sale (“Request”) of the subject property, the net sale
proceeds from which we agree to accept as the payoff of the mortgage loan even though the proceeds are
expected to be less than the full amount due.
Short Sale Program—Terms and Conditions of the Request are as follows:
1. Allowable Costs that May be Deducted from Gross Sale Price
a. Closing Costs. The closing costs paid by you or on your behalf as seller must be reasonable and customary
for the market. [Choose one and delete unnecessary text.] [Acceptable closing costs, including the
commission, which may be deducted from the gross sale proceeds may not exceed $__________.] OR
[Acceptable closing costs, including the commission, which may be deducted from the gross sale proceeds
may not exceed ____% of the list price.] OR [Closing costs which may be deducted from the gross sale
proceeds are limited to title search and escrow expenses usually paid by the seller; reasonable settlement
escrow/attorney’s fees; transfer taxes and recording fees usually paid by the seller; termite inspection
and treatment as required by law or custom; pro‐rated real property taxes; and, negotiated real estate
commissions not to exceed six percent (6%) of the contract sales price [add other closing costs that may
be included].]
b. Subordinate Liens. We will allow up to three percent (3%) of the unpaid principal balance of each
subordinate lien in order of priority, not to exceed a total of $3,000, to be deducted from the gross sale
proceeds to pay subordinate lien holders to release their liens. We require each subordinate lien holder to
release you from personal liability for the loans in order for the sale to qualify for this program, but we do
not take any responsibility for ensuring that the lien holders do not seek to enforce personal liability
against you. Therefore, we recommend that you take steps to satisfy yourself that the subordinate lien
holders release you from personal liability.
d. Real Estate Commissions. We will pay real estate commissions as stated in the listing agreement
between you and your broker, not to exceed six percent (6%) of the contract sales price, to be paid to the
listing and selling brokers involved in the transaction. Neither you nor the buyer may receive a
commission. Any commission that would otherwise be paid to you or the buyer must be reduced from the
commission due on sale. [Optional text:] Please note: We have retained a vendor to assist your listing
broker with the sale, and this vendor must be paid ____% [or $____] from the commission.
e. Borrower Relocation Assistance. If the closing of the short sale occurs in accordance with this
Agreement, you will be entitled to an incentive payment of $1,500 to assist with relocation expenses. We
will instruct the settlement agent to pay you from the sale proceeds at the same time that all other
payments, including the payoff of our first mortgage, are disbursed by the settlement agent. Only one
payment per household is provided for the relocation assistance, regardless of the number of borrowers.
2. Property Maintenance and Expenses. You are responsible for all property maintenance and expenses of your
home until you convey your Property to us, including utilities, assessments, association dues, and costs for
interior and exterior maintenance. Additionally, you must report any and all property damage to us and file a
hazard insurance claim for covered damage. Unless insurance proceeds are used to pay for repairs or personal
property losses, we may require that they be applied to reduce the mortgage debt.
3. [Insert only if applicable:] Partial Mortgage Payments. Beginning on ___________ 1, 20___, you will be
required to make partial mortgage payments of $_________ by the first day of each month during the term of
the Request and pending transfer of property ownership. You are legally obligated to make the full amount of
your current monthly mortgage payments. However, we will accept this reduced partial payment until the
house is sold or this Agreement expires. The partial mortgage payments do not constitute a modification of
your mortgage.
4. Parties to the Sale. The Sales Contract must include the following clauses: “Seller and Buyer each represent
that the sale is an “arm’s length” transaction and the Seller and Buyer are unrelated to each other by family,
marriage or commercial enterprise.” “The Buyer agrees not to sell the property within 90 days of closing of
this sale.”
5. Foreclosure Sale Suspension. We may initiate or continue the foreclosure process as permitted by the
mortgage documents; however, we will suspend any foreclosure sale date until the expiration date of this
Request or the date of closing of an approved short sale, whichever is later, provided that you abide by its
terms and conditions.
6. Satisfaction and Release of Liability. If all of the terms and conditions of this Request are met, upon sale and
settlement of the property, we will prepare and send to the settlement agent for recording, a lien release in
full satisfaction of the mortgage, foregoing all rights to pursue a deficiency judgment.
7. [Insert only if applicable.] Mortgage Insurer or Guarantor Approval. The terms and conditions of the
purchase contract are subject to the written approval of the mortgage insurer or guarantor.
8. Termination of This Request. Unless otherwise agreed by the parties, this Request will terminate on [insert
date] if the sale does not close. This Request may be terminated earlier if:
a. You fail to provide all the required documents listed above.
b. Your financial situation improves significantly, you qualify for a modification, you bring the account
current or you pay off the mortgage in full.
c. You or your broker fails to act in good faith in closing on the sale of the property or otherwise fails to
abide by the terms of this Request.
d. A significant change occurs to the property condition or value.
e. There is evidence of fraud or misrepresentation.
f. You file for bankruptcy and the Bankruptcy Court declines to approve the Request.
g. Litigation is initiated or threatened that could affect title to the property or interfere with a valid
conveyance.
h. [Insert only if applicable:] You do not make the payments required under this Request.
9. Settlement of a Debt. The proposed transaction represents the Servicer’s attempt to reach a settlement of
the delinquent mortgage. You are choosing to enter into this transaction even though there is no guarantee
that the transaction will be successful. In the event this transaction is unsuccessful, the Servicer may exercise
all remedies under the mortgage, including foreclosure. |
