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What is the difference between a short sale and a foreclosure

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By e13o13

Video explaining What a short sale is


Avoid Foreclosure with a Short Sale

By Susan M. Keenan

One strategy that can be used to avoid the stigma of a foreclosure while saving your credit history is to use a short sale. A short sale is a sale of real estate at a price that is lower than the outstanding balance on the mortgage loan. A short sale offers a viable option to obtain the major portion of the debt that is owed to the mortgage holder. Even if the full amount cannot be garnered through a short sale on the property, this strategy places the homeowner in a favorable light with the lender.

A short sale also allows the homeowner to maintain some sense of dignity and semblance of financial responsibility while avoiding all of the negative consequences of a foreclosure. Banks, lenders, and mortgage companies are all in the business of making money. This means that sometimes they are more than willing to cut their losses and avoid foreclosing on the property of a homeowner who is obviously willing to pay off their debt.

Selling a home in a buyer's market

Homes have depreciated in value in many areas. This means that the likelihood of realizing the full amount of the mortgage debt is diminished. Even so, the homeowner will have an easier time selling the home during a buyer’s market when and if he offers the home at a lower price than the current market value.

Lender's prefer Short Sales

Lenders are usually more than willing to forego a foreclosure in favor of a short sale since they can also avoid the negative financial ramifications of this type of procedure. The lender can avoid the monetary costs of dealing with a foreclosure while recouping a major portion of the debt. The homeowner can avoid the negative impact to his credit report by avoiding a foreclosure. The incidence of a foreclosure remains on an individual’s credit report for ten years. That is a long time to suffer the consequences of a down housing market and financial difficulty.

Additional benefits of undergoing a short sale include some negotiable points for the homeowner. The current homeowner might be able to negotiate remaining in the home until the new owner takes possession of the home. If this were to occur, the current homeowner might be able to do so without making mortgage payments. Quite often, foreclosure proceedings eventually turn into bankruptcy proceedings somewhere down the line. Avoiding a foreclosure could help an individual avoid a bankruptcy.

New tax rules for short sales and foreclosures

Foreclosures and Short Sales in the News

  • Feds to unveil new short-sale planBoston Herald3 days ago

    If you're in trouble on your mortgage and you can't get a loan modification, check out the Obama administration's new standardized short-sale plan that's...

  • New rules made for short salesInland Valley Daily Bulletin5 hours ago

    Last week the Obama Administration s Treasury released the new guidelines for the processing of short sales, titled Supplemental 09-09. These guidelines are for loan servicers who sign an agreement with Fannie Mae prior to Dec. 31 to participate in the Home Affordable Modification Program (HAMP).

  • Briefly: Ladera distressed property highest since AprilCanyons, Coto, Ladera & RSM News16 hours ago

    LADERA RANCH - The latest real estate figures from Steven Thomas of Altera Realty show that 49.4 percent of Ladera Ranch property currently on the market is either a foreclosure or a short sale. This rate is the highest since April, when the rate was...

  • Standardized short-sale plan may relieve big headacheSeattle Times4 days ago

    WASHINGTON — If you're in trouble on your mortgage and can't get a loan modification, check out the Obama administration's new standardized short-sale plan scheduled to roll out during the coming months.

  • The Nationâs Housing: There could be a pothole in new short-sale planRichmond Times-Dispatch4 days ago

    The program, outlined Dec. 1 by the Treasury Department, is an attempt to streamline what has traditionally been a contentious, time-consuming process by requiring lenders and others to use nationally uniform documents, timelines and financial incentives. A short sale involves a lender or investor agreeing to collect less than the balance owed on a mortgage debt out of the proceeds of a ...

  • Obama's standardized short-sale plan could help troubled homeownersLos Angeles Times4 days ago

    If you're in trouble on your mortgage and can't get a loan modification, check out the Obama administration's standardized short-sale plan that's scheduled to roll out in the next several months.

  • Ending the Housing Crisis One Short Sale at a Time â How One Company Provides Security to the ProcessRISMedia Real Estate News3 days ago

    RISMEDIA, December 14, 2009—Short sales and home warranties seem to go hand in hand, especially considering the realities of today’s real estate market. “Short sales have a hundred moving parts; a hundred problems that all need to be solved at the same time,” says Bonnie Overbeck of Three Blondes and a ...

  • Report: Aliso Viejo distressed properties higher than county percentageAliso Viejo & Laguna Niguel News1 second ago

    About 58 percent of homes for sale in Aliso Viejo are short sales or foreclosures, according to a biweekly report by Steven Thomas of Altera Real Estate.Of the 108 homes for sale on the market, 63 are listed as short sales or foreclosures, according...

Short Sale or a Foreclosure - which will save you money?

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