Is short selling your home right for you?

Are you considering selling as a short sale?  If you are unable to make the payments on your home and cannot sell the home for a price that would pay off your first and/or second mortgage, then you may want to consider a short sale as opposed to letting the home go as a foreclosure.  In a short sale, the underlying mortgage holders agree to accept less money from a sale than the full amount of their mortgage.  A short sale is possible even if the homeowner has a second or even third mortgage or home equity line of credit against the home. 

The benefit to the seller is that a foreclosure and its more negative impact on credit is avoided.  A foreclosure can remain on one’s credit history for seven years, while a short sale lasts only about three years.  Also, a seller may be able to repurchase a home after a short sale in even less time than three years.  A short sale provides a more graceful exit from an unsustainable mortgage than a foreclosure. 

Short sales are so common that the banks have whole departments dedicated to processing short sale requests.  In addition, several legal developments have recently been implemented that further help homeowners looking to short sale their homes.  Among these developments is the Washington Fairness in Foreclosure Act by which a homeowner can require a face to face meeting with their mortgage holder in order to negotiate a loan modification or a short sale price.  There has also been a recent consent decree between a number of the larger banks and the state attorney generals for all states which sets out certain requirements and standards that the banks must follow when dealing with short sellers.  There are also dedicated short sale negotiators who can interface with the banks on the seller’s behalf to gain short sale approval. 

If you or someone you know is facing a situation that will likely end in a foreclosure, contact me at SteveAndrews@hughes.net to discuss the possibility of a short sale and the process involved.  With the right representation, the short sale process does not have to be intimidating or painful to the seller.  A short sale can result in the best outcome to a difficult situation.