A real estate short sale is never considered a good thing, but it usually is the best option when considering how to sell your home without going through the foreclosure process.
During these difficult financial times, there are a myriad of ways for people to walk away from their houses. A foreclosure is the most humiliating experience with real potential to see you being evicted from your home by your local sheriff. Most homeowner's also think that filing for bankruptcy will help them to hold onto their home, but this is not true. A bankruptcy will stop the foreclosure for a short time only. For those people suffering a financial hardship and unable to pay their mortgage, the best option to think about is a short sale.
Many people ask me "what is a short sale?" Essentially, when you short sell your home, you are selling your home for less than the full amount you owe your mortgage lender. Short sales are a huge part of real estate sales right now because many homeowner's need help getting out of their home into something more affordable, and a short sale is a great way to avoid the humiliating process of a bankruptcy or a foreclosure.
The government is trying to help homeowner's by giving them some options when choosing a short sale or a foreclosure. Under HAFA, banks must take the short sale payment as payment in full. It also give the homeowner's $3,000 to help with relocation costs. Previously, lenders refused to accept short sale payment as complete payment and they would go after the seller's for a deficiency judgment. Usually, this would cause homeowner's to file bankruptcy. During this time, many homeowner's were choosing foreclosure over short sale which is why the government designed the HAFA program.
The 2nd program the government put into act is the Mortgage Forgiveness Debt Relief Act of 2007. When a short sale closes and the lender accepts the short sale payment as payment in full, the lender will then send the homeowner a 1099-C. Previously, this 1099-C would have been considered income to the homeowner and would have significantly raised his tax liability. However, under this Act, the qualifying homeowner can claim the income as $0 and not increase his/her tax liability. In essence, the federal government has given incentives to all parties to consider a short sale instead of a foreclosure.
Please consider that all lenders will not necessarily take a short sale. There are a small amount of circumstances where the bank will choose to foreclose because it is more profitable for them. However, most lenders aggressively pursue the short sale because they don't want to do the foreclosure either.
During these difficult financial times, there are a myriad of ways for people to walk away from their houses. A foreclosure is the most humiliating experience with real potential to see you being evicted from your home by your local sheriff. Most homeowner's also think that filing for bankruptcy will help them to hold onto their home, but this is not true. A bankruptcy will stop the foreclosure for a short time only. For those people suffering a financial hardship and unable to pay their mortgage, the best option to think about is a short sale.
Many people ask me "what is a short sale?" Essentially, when you short sell your home, you are selling your home for less than the full amount you owe your mortgage lender. Short sales are a huge part of real estate sales right now because many homeowner's need help getting out of their home into something more affordable, and a short sale is a great way to avoid the humiliating process of a bankruptcy or a foreclosure.
The government is trying to help homeowner's by giving them some options when choosing a short sale or a foreclosure. Under HAFA, banks must take the short sale payment as payment in full. It also give the homeowner's $3,000 to help with relocation costs. Previously, lenders refused to accept short sale payment as complete payment and they would go after the seller's for a deficiency judgment. Usually, this would cause homeowner's to file bankruptcy. During this time, many homeowner's were choosing foreclosure over short sale which is why the government designed the HAFA program.
The 2nd program the government put into act is the Mortgage Forgiveness Debt Relief Act of 2007. When a short sale closes and the lender accepts the short sale payment as payment in full, the lender will then send the homeowner a 1099-C. Previously, this 1099-C would have been considered income to the homeowner and would have significantly raised his tax liability. However, under this Act, the qualifying homeowner can claim the income as $0 and not increase his/her tax liability. In essence, the federal government has given incentives to all parties to consider a short sale instead of a foreclosure.
Please consider that all lenders will not necessarily take a short sale. There are a small amount of circumstances where the bank will choose to foreclose because it is more profitable for them. However, most lenders aggressively pursue the short sale because they don't want to do the foreclosure either.
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Learn more about what is a short sale. Stop by SocalShortSale.org's website where you can find out all about ashort sale and what it can do for you.
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