In my opinion the best option to avoid foreclosure is to pursue the short sale process, which occurs when a bank or mortgage lender agrees to discount a homeowner’s loan balance due to an economic hardship.
A short sale is typically executed to prevent a home foreclosure.
Some of the advantages of a short sale for homeowners include avoiding foreclosure and lessening the damage to their credit report.
Maintaining a good credit report is imperative since employers have the right to check the credit report of employees who are in sensitive positions. A foreclosure is one of the most detrimental items to have on a credit report and in some cases is grounds for immediate reassignment or termination. On the other hand, in many cases a short sale is not reported on a credit report and is therefore not a challenge to employment.
The advantages for lenders: a short sale is typically less expensive for lender than foreclosure. Lenders often choose to allow a short sale when they believe that it will result in a smaller financial loss.
In the case of a foreclosure, the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This often contributes to a higher deficiency judgment.
In a properly managed short sale the home is sold at a price, usually close to market value. In almost all cases this is far better than an REO sale.
Disclaimer: This information is provided for information purposes only. You should always seek independent counsel such as certified public accountant and or real estate attorney pertaining to sale of your home, land and or real property in the matters of state and federal taxes and legal issues.
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