Foreclosure
What is Foreclosure?
At the time of settlement, you signed paper work agreeing that the mortgage company has a right to take ownership of the property through a process called foreclosure if you stop paying your monthly mortgage payments.
When you miss mortgage payments, in some cases for as short a period as 60 days, you are considered in default on your mortgage. Mortgage lenders can move your loan into collections, which can be the start of the foreclosure process.
If you are having trouble keeping up with your mortgage payments, or if you have received a notice from your lender asking you to contact them, don't ignore it. Contact your lender immediately to try to work out your options.
Short Sale
Options for Avoiding Foreclosure—Short Sale
Many homeowners facing rising interest rates on their sub prime adjustable rate mortgages and flat or falling home prices, are being advised to use a short sale to help them out of the difficult situation of mortgage delinquency or foreclosure.
What is a Short Sale?
A short sale is an "arrangement" between the current owner of a home and the current mortgage lender holding the mortgage to accept an offer for less than the total amount owed to pay off the home loan which also includes other obligations such as closing costs, property taxes, transfer tax, and/or commission.
In some cases, sellers may be in default on their mortgage and are potentially facing foreclosure.
Life changes such as a divorce or job transfer may force a sale of their property, but some sellers find themselves in an “upside down” situation, meaning that they owe more than they can potentially realize from the sale of their property.
Short Sale Basics
The buyer of a property being sold in a short sale should be aware of several key issues. The contract is usually contingent upon the agreement of the seller’s mortgage lender to accept the net proceeds of the sale as full payment for the underlying debt. This is often a long process, which can delay an anticipated settlement date, and buyers and agents should be prepared for this possibility. Indeed, the fact that the property is a short sale should be disclosed in the comments section of the Multiple Listing Service listing. The sales contract should also include a third party addendum, outlining that the contract is contingent upon the agreement of the seller’s mortgagee to accept the net proceeds of the sale as full payment of the underlying outstanding debt.
Help with Short Sales
As always, if you are considering a short sale, or any real estate transaction, whether you are a seller or a buyer, it is important to seek competent legal and financial professional advice. Be sure you deal with a real estate professional with experience with short sale transactions
Yours Truly
Gloria Jenson