Shortsales are Realestate Investors best friend?
Shortsales are quickly becoming an option mortgage lenders are willing to pursue in order to avoid the expense of foreclosure. Industry experts state the average cost to lenders on foreclosure property is $80,000 per house. With thousands of Americans facing foreclosure, the financial impact is devastating to lenders. In order to lessen the blow to their bottom line, many are willing to engage in alternative solutions.
Shortsales give homeowners the opportunity to sell their home for an amount less than is owed on the loan. The sale needs to occur within a specified period of time. The lender typically specifies the minimum amount they are willing to accept prior to the allowing the homeowner to put their house on the market.
While shortsales might sound like the answer to your prayers, it's important to note that different lenders offer different strategies. Some are willing to accept the short sale amount and write-off the rest. Others are willing to accept the short sale amount, but require the homeowner to pay the difference.
For instance, if a borrower owes $150,000 on their home and the lender agrees to accept $125,000, the borrower will be responsible for the remaining $25,000. The borrower than obtains a loan and makes monthly installments. If the borrower is unable to obtain a loan for the difference, or if he defaults on that loan, the lender will then place a lien against them.
When a lien is placed against a borrower, it is reflected on their credit history. Although the borrower avoids the negative credit reporting associated with foreclosure, the lien can prevent them from obtaining any type of credit or force them into obtaining sub-prime loans.
When shortsales are crafted to make the borrower responsible for the difference, it is referred to as a 'deficiency judgment'. The judgment is reported to credit bureaus and remains on the borrower's credit report for 7 to 10 years, even after it has been paid in full.
Deed in Lieu of Foreclosure is an option that allows borrowers to give the house back to the lender and walk away free and clear from the debt. With this type of arrangement, the lender agrees to accept the shortsale amount as payment in full and does not pursue the borrower for the difference.
Although a Deed in Lieu of Foreclosure will have a negative impact on your credit, it is not as devastating as an actual foreclosure. It is important to note that in some instances the difference between the shortsale and balance due may be subject to income tax.
Not all lenders engage in shortsales and those that do enter into them as a last resort after all other options have been exhausted. If you are unable to become current on your mortgage note, Simon Volkov may have a solution for you. Through our nationwide network of real estate investors, we are helping hundreds of Americans just like you, who are facing foreclosure.
If your lender has indicated an interest in offering you a shortsale on your property, or if you are in the pre-foreclosure stage, now is the time to contact Simon Volkov. There is no fee to speak with Simon Volkov. To get started fill out our Shortsales and Pre-foreclosure Form.
Published on March 17, 2008 at 07:11 AM