Do I Need a Short Sale?

 

Ok, I Get It…A Short Sale May Be My Best Option…Tell Me More…

 

Ok, I Get It…A Short Sale May Be My Best Option…Tell Me More…

 

A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. For example: A homeowner, who is facing

foreclosure, has an existing first mortgage of $500,000. The market value of the home is

$350,000. Long story short, the lender accepts the offer for $350,000 and the home is sold. That’s a short sale.

 

Why are lenders so eager to take such a huge discount? Banks do not like bad loans. If they see an opportunity where they can sell the property without the huge loss of a

foreclosure, they will do it. Some lenders report that if the home goes into foreclosure

by the time the home actually closes with the new buyer, the lender will be lucky to net

50% of the original loan balance. 

 

Bottom line from the lenders perspective?

 

They are in the business of lending money, not owning homes. If they can accept a short

sale offer and rid themselves of the bad loan AND net more vs the home going into

foreclosure, they will do it every time. It’s simply smart business.

 

Time is not on your side when you are considering a short sale. You must act quickly

and work only with a real estate expert who has successfully completed and graduated

from advanced real estate education programs like Harris Real Estate University.

 

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Mortgage foreclosure simply means the deed can only be foreclosed through court action.

Mortgage foreclosure is usually referred to as a judicial foreclosure.

 

A mortgage is a security document that allows the borrower to keep title of the

property while using the property as security or collateral for a loan. The lender then

places a lien on the property in the event the owner does not pay the agreed payment.

When the borrower pays off the loan, the lender gives the borrower a satisfaction of

mortgage that removes the lien from the property. About half the states in the U.S.

use mortgage foreclosure as the means of satisfying the loan balance.

 

As with most mortgage foreclosure lawsuits, it starts with a summons and a complaint is

issued to the borrower and any other parties with inferior rights in the property. Usually

the lender’s attorney is the one who issues the notice. The complaint is usually filed in

the court where the trial is to be held. Here’s the interesting part. Once the borrower has

been notified, he or she has 20 days to respond back to the court challenging them

on the mortgage foreclosure lawsuit. Once this occurs, the court now has 40 days to

respond back to the borrower. Keep in mind that each correspondence must be legit and

deal with some specific part of the complaint. This process may go back and forth as long as the borrower finds something erroneous with the complaint. This slows a mortgage foreclosure greatly because it must go through the court system. It may go as long as a year if needs be or even longer. This is how many homeowners stay in their homesfor months often years after they have stopped making their house payments.