Pre-Foreclosure Sale Case Study: A Maury County FHA Short Sale, Start to Finish

Quick answer (as of November 2026) My second short sale, in Maury County, took about five months from listing to closing: about nine weeks to find a buyer, about three months of lender review, and two days from final approval to the closing table. The homeowner was two payments behind and in a forbearance plan when we listed in late summer 2025. It closed in early 2026 with $0 from the seller and an executed deficiency waiver from the servicer.

You're two payments behind. You called your servicer, and now you're in a forbearance plan that buys time but doesn't change the math. You're trying to decide whether to keep the house, rent it out or sell it, and none of the answers look good.

That's where the homeowner in my second short sale was when we met at the house in the summer of 2025. I'm keeping their name off this page, so it covers what we weighed, what I did, how long each stretch took and how it ended, without the name.

I've been selling real estate since 2013, with more than 500 transactions, and I live in Thompson's Station. If you're in the same spot, DM, text or call me at 615-392-1186.

What put this Maury County homeowner in a hole?

The homeowner's plans had changed, and the mortgage payment plus HOA dues no longer fit. By the time we listed, they were two payments behind on an FHA loan and in a forbearance plan with their servicer.

The CFPB describes forbearance as your servicer arranging for you to "temporarily pause mortgage payments or make smaller payments," and adds: "You still owe the full amount, and you pay back the difference later." So the question of keep, rent or sell still had to be answered.

What options did they weigh before choosing a pre-foreclosure sale?

The homeowner weighed five paths before choosing a pre-foreclosure sale, and I asked twice whether keeping or renting the house was the better move before we filed anything.

We started as a regular listing. About a month in, the homeowner brought up forbearance and a short sale, and I laid out the order of it like this: "For the short sale we'd lower the price, get an accepted offer and then submit to bank for them to [approve] the sale at that price. And it would be contingent on approval from bank."

If you're at this fork, your options when you owe more than your home is worth and ways to sell creatively cover the paths short of a short sale. The retention decision is yours. If keeping the house is possible and right for you, take a hard look before you say no.

What did I do on this pre-foreclosure sale, step by step?

On this pre-foreclosure sale, my job was to get the price right, build a complete package fast, and then keep a slow servicer moving through the holidays. The weeks below count from the week we listed.

1. Week 0. We met at the house, got it ready and listed it as a regular sale. Later that month I had a 3D walkthrough shot.
2. Weeks 1 to 4. I asked for the mortgage statement to look at creative options first. When the homeowner raised a short sale, I walked through keep, rent or sell with them before we filed anything. They chose the short sale, and I prepared a new listing agreement and the short sale forms.
3. Weeks 6 to 8. The market was soft. Each price cut I proposed came with sold comps of the same floor plan, so the homeowner could see why.
4. Week 9. An offer came in. We countered, and the contract was signed the next day.
5. Within a week of the contract. The homeowner called the servicer and signed a third-party authorization naming me. I built the full package and sent it.
6. The next four weeks. I phoned the servicer every week or two and logged every call. After hours on hold and one two-hour call that dropped, I switched to email and to the underwriter directly. We extended the closing date once.
7. About four weeks after the package went in. The servicer's appraiser came out. The as-is value came back about a week later, a few thousand dollars above our contract price.
8. About three weeks after that. The servicer approved the sale as-is and asked for an updated listing price. The next week it asked for a listing amendment with HUD's cancellation clause and a fix to how a name appeared on the authorization form.
9. Just before Christmas. The servicer confirmed the homeowner was accepted into HUD's pre-foreclosure sale program. Two days later we learned the numbers were about $1,500 short of HUD's 88 percent line. The buyer's agent and I cut our commission by that amount to close the gap.
10. The holidays. A holiday backlog at HUD meant we missed our year-end closing target. We revised the closing statement and sent it in. Then the new year reset the taxes, interest and HOA dues, so the servicer asked for a fresh statement, and we extended the contract again.
11. The first week of January. We corrected the statement again, moving credit lines until the seller's line read $0. HUD approved the concessions and HOA fees, and the servicer issued the approval letter.
12. The day before closing. The title company caught a commission mismatch on the final statement. We resubmitted, the approval was reissued on closing day, and we closed two days after the first approval letter.

Along the way, I paid the HOA's sale package fee up front, and it was reimbursed through the closing. When the homeowner was moving out, I told them not to worry about patching holes. As I put it at the time: "It's best to not fix the holes... no good deed can go unpunished."

What the servicer asked for in the package

The servicer wouldn't review anything until the package was complete. My note on this file, in capital letters: "THEY WILL NOT REVIEW UNTIL YOU HAVE A COMPLETE PACKAGE." Here's the list:

1. The signed purchase contract
2. A borrower financial worksheet
3. The last 30 days of pay stubs
4. The last two months of bank statements
5. The active listing agreement
6. A preliminary settlement statement
7. A third-party authorization naming the agent

Your servicer may ask for more or less. The short sale process post walks through every stage for any loan type.

Why did the lender's numbers keep moving?

The numbers on this pre-foreclosure sale kept moving because HUD sets a floor on what the sale has to net, caps what the seller can contribute, and reviews every line on the closing statement. The floor is measured against the servicer's as-is appraisal, and it steps down the longer the house has been marketed under HUD's program.

Source: HUD Handbook 4000.1, III.A.2.j.ii, last revised August 12, 2026.

In this file, the servicer measured us against the 88 percent line, and the appraisal had come in above our contract price, which made the math tight. The servicer also held the seller's help toward the buyer's closing costs to 3 percent of the price. When the buyer needed more than that, the rest had to come from the agents. I explained it to the homeowner this way: "You as the seller can only put in 3% max so the rest of the credit is gonna come from the Buyers Agent and myself."

How long did this pre-foreclosure sale take?

My second short sale took about five months from listing to closing, and about 13 weeks from accepted offer to closing, as of its early 2026 close. Two days after the contract was signed, my own note on the file said a short sale on a good day can take up to three months. From accepted offer to closing, this one ran about that long.

Both late slips were paperwork: a holiday backlog and a new-year reset of the numbers, then a commission mismatch the day before closing. The Columbia file ran on a different clock, with a buyer who walked. That file is in FHA Short Sale Case Study: Columbia, and how long a short sale takes puts both side by side.

How did the pre-foreclosure sale turn out for the homeowner?

The homeowner sold for less than they owed, brought $0 to closing, and the servicer's clear to close came with an executed deficiency waiver. No foreclosure happened.

The day before closing I texted them: "Short sales are a pain." This one still closed, with the remaining balance waived in writing.

What happens to the balance and your credit after a pre-foreclosure sale?

After a pre-foreclosure sale on an FHA loan, HUD's definition has the lien holders agreeing to forgive the deficiency balance, but the paper that protects you is your own approval letter and any written waiver.

• The leftover balance. HUD defines a pre-foreclosure sale as one where "the lien holders agree to release their liens and forgive the deficiency balance on the real estate." The CFPB says that in some states a lender could sue for the deficiency after a short sale, and that if the lender waives it, "get the waiver in writing and keep it for your records." In this file the waiver came signed with the clear to close. Have a Tennessee real estate attorney read yours. My second mortgage, HELOC and deficiency guide covers junior liens and what a lender can still pursue.
• Your credit report. HUD makes the servicer tell you in writing that a pre-foreclosure sale is reported to the credit bureaus and "will likely affect the Borrower's ability to obtain another Mortgage and other types of credit." The CFPB says a credit reporting company "generally can report most negative information for seven years."
• Your next FHA loan. HUD generally requires three years from the date title transferred in the short sale, with exceptions for borrowers who were current for the 12 months before the sale or had documented extenuating circumstances beyond their control and have re-established good credit. Conventional, VA and USDA rules are in does a short sale hurt your credit. Ask a loan officer before you count on a date.
• Taxes. The IRS says that generally, "you must include the canceled debt in your income," and a lender that reports it sends Form 1099-C. IRS Publication 4681 (2025) says the main home exclusion doesn't cover discharges completed, or agreements made, after December 31, 2025. Other exclusions, such as insolvency, may apply. Talk to a tax professional before you sign the approval.

Disclosure: Tax figures on this page are the federal rules as published for 2026 and are for planning only. I am a licensed Realtor (TREC 369038), not a tax professional or a lender. Confirm your own situation with a CPA, and any borrowing limit with your lender, before you rely on a number.

If you're behind or in forbearance, what should you do first?

If you're behind or in forbearance, first find out whether you have equity, and ask your servicer in writing what happens when the plan ends. Then take these steps in order.

1. Find out what the house is worth against what you owe. Use my home equity calculator, or I'll run it for you. With equity, you may not need a short sale at all.
2. Call your servicer's loss mitigation department. Ask what options you're being reviewed for and what happens when your forbearance ends. On an FHA loan, ask for form HUD-90035, HUD's pre-foreclosure sale information sheet.
3. Talk to a HUD-approved housing counselor. The CFPB's counselor search lists agencies that give independent advice, "often at little or no cost to you."
4. Decide keep, rent or sell. Be honest about whether you want to be a landlord.
5. Start gathering the package now. The seven items above are what this servicer asked for. One missing page can cost you weeks.
6. Get any deficiency waiver in writing before you close, and have a Tennessee real estate attorney read the approval. Take the tax question to a tax professional.

Don't stop paying because someone told you it's how you qualify. I'm not telling you to miss a payment. If a foreclosure sale date is already set, read can you sell a house in foreclosure in Tennessee? today, and see short sale vs foreclosure in Tennessee for how the two compare. For the whole picture, start with my Tennessee short sale guide.

Frequently asked questions about this pre-foreclosure sale

What is a pre-foreclosure sale?

A pre-foreclosure sale is HUD's name for a short sale on an FHA loan: a sale that brings in less than you owe, where the lien holders agree to release their liens and forgive the deficiency balance. Your servicer reviews it under HUD's rules.

Can you do a short sale while you're in forbearance?

In my second short sale, the homeowner was two payments behind and in a forbearance plan when we listed, and the sale closed with the servicer's approval. Your servicer decides what your plan allows, so ask in writing.

How long does a pre-foreclosure sale take?

My second short sale took about five months from listing to closing and about 13 weeks from accepted offer to closing. Most of that was the lender's review, which ran through a holiday backlog at HUD and a new-year reset of the numbers.

What is HUD's 88 percent rule on a short sale?

HUD's rule is that during the first 30 days of marketing, the servicer can only approve an offer that nets at least 88 percent of the as-is appraised value. The floor drops to 86 percent for days 31 to 60 and 84 percent for days 61 to 120.

Did the lender forgive the rest of the debt?

In this file, yes. The servicer's clear to close came with an executed deficiency waiver, and the homeowner brought $0 to closing. Your own approval letter governs your file, so have a Tennessee real estate attorney read it.

Behind on an FHA loan and not sure whether to keep, rent or sell?

Tell me what you owe and where the payments stand, and I'll go through each option with you on a call. DM, text or call me at 615-392-1186.