When properties fall into foreclosure it’s not usually the fault of the homeowner. However, it is unfortunate and sometimes devastating to them. They don’t talk about it. It’s a complicated process that some even turn their backs on just hoping that it will go away. They'll deal with it later. Unfortunately this is the wrong path. No matter what the reason, face the short sale and come out a winner.

Facing a foreclosure is all about understanding the process and have professionals by your side to guide you through. Start with an initial consultation to evaluate your situation, answer many of your questions and suggestions of other professionals tha could assist you further. You will leave the meeting with a clear vision of the future and comfort that you will get through this.

Question: What is a Short Sale? Answer: A Short Sale occurs when a homeowner owes more on their property than the property is actually worth, but their bank agrees to accept less than what is owed as payment-in-full.

Question: What does it mean for the lender to "accelerate the note"? Answer: After the homeowner has fallen behind on their mortgage payments, the lender can call the entire outstanding balance due within a certain amount of time, usually 20-30 days.

Question: What is the timeline of the foreclosure process? Answer: The timelines can vary from lender to lender and from month to month. But there is a basic guideline. Most lenders will follow this to the day. There are ways that you can sometimes get the timeline extended. But, you can’t always count on it.

• 3 months … Default Period: Typically this is 3 months behind in your payments. Your note will have an explanation of the guidelines for your loan.
• 30 days … Notice of Default Period: Sometimes called an Acceleration Period. This is a 30 day notice to either come current on the delinquent balance or agree to a Forbearance Agreement in which case the lender will postpone the foreclosure process.
• 90 days … Foreclosure Period: At the end of the 30 days, the homeowner will receive the foreclosure Notice. The homeowner now has 90 days to get the house SOLD or come current with the lender(s).
• 17 days … Auction: This is a public sale of the home which occurs 17 days after the last day of the foreclosure period. The minimum bid will be the amount that is owed to the lien holders, attorney fees and penalties.
• Unknown … Bank Owned: The property will be place with a real estate agent and listed in the MLS for sale. In most cases it is listed at or close to the auction minimum bid price. This is not in stone. But, the bank will try to protect their bottom line as long as they can.

Question: What is a Forbearance Agreement? Answer: A Forbearance Agreement is simply a fancy name for a repayment plan. In simple terms, a lender agrees to postpone starting the foreclosure process to give the borrower a chance to catch up on late or missed payments.

Question: What is a Deficiency Judgment? Answer: Technically, the lender can pursue a deficiency judgment or repayment for the amount that they discounted loan or wrote-off in the Short Sale.

Question: What if there are judgments that have attached to the property?  Answer: The Escrow Agent will run a title search to determine if there are any outstanding judgments against the Seller that have attached to the property and that will have to be negotiated and settled prior to closing.

Question: Are there potential tax ramifications to the homeowner for doing a Short Sale? Answer: When a lender accepts a Short Sale, they are cancelling or forgiving debt. The IRS considers this cancellation or forgiveness of debt to be taxable income.

Question: What is the impact on the homeowner's credit for doing a Short Sale? Answer: A Short Sale is far less damaging to the homeowner's credit than a foreclosure or deed-in-lieu of foreclosure.

For more information about short sales and foreclosures go to www.BePicky.com and find the Foreclosure Box. Receive a FREE Foreclosure Q and A and access to the Real Estate Consulting Group.