Being foreclosed on? Consider short sale as an alternative.
Being foreclosed on can be scary. You are already in financial hardship and now you stand the chance of losing your home. If you do not qualify for refinance, another alternative to foreclosure is the short sale of your home.
In a short sale, you put your house on the market, and ask the bank to allow you to sell it for a lower, previously agreed upon price (such as the actual Fair Market Value). The bank then promises to accept that sales amount, minus any fees they approve, in FULL satisfaction of your outstanding debt. Once the short sale closes, the foreclosure action becomes moot and is withdrawn.While it still results in the loss of the home a short sale has many advantages to the home owner over the foreclosure process.
The benefit of a short sale is that because the bank is accepting the amount in full satisfaction, there is no deficiency. A deficiency is the difference between the amount owed, and the value or sales price of the house. In a foreclosure, lenders generally seek a judgment for the deficiency against the home owner. You can lose your home AND owe the bank money after. However, in a short sale, any deficiency is forgiven and the home owner is free and clear of the lender.
The second benefit is that the attorney fees associated with defending against foreclosure can quickly accumulate, especially if your goal is to buy more time in the home. Going through short sale, where you stand a good chance of the bank covering the closing attorneys fees, can save you on some of those fees for court appearances and document prep associated with foreclosure.
Getting a lender to accept a monetary loss is never easy. the short sale process takes a lot of time. They will require documentation regarding the income of the home owner as well as the value of the property. Approval is not guaranteed in any way, as short sale approval is in the hands of the bank. Further, there are tax consequences associated with being forgiven debt, so a CPA or tax attorney should be consulted.
If you need representation for a foreclosure or a short sale, contact our law office today for a free consultation.