Short Sale versus Foreclosure

With so many homes in foreclosure most homeowners are unaware there is an alternative. If your house is reasonably priced and you have a buyer willing to purchase your home you can execute a Short Sale. A short sale is a transaction where the lender is willing to take less than what is owed on the home. In many cases, the lender will forgive the balance on the mortgage. However, if the hardship of the homeowner does not fall within the guidelines of the lender ,they may ask you to take a note out for a reasonable sum of money for 0% interest over 10 years. If a note is not part of the negotiation, then it is possible that you will receive a 1099 for the difference. All of these resolutions are at the lender's discretion.

A Short Sale can take anywhere from 60 -120 days. This duration is occurring because the lenders have not properly staffed this division. Currently, they are moving the employees from the foreclosure department to the short sale division to help expedite this process. The lenders realize they do not want to hold real estate. They are in the business to borrow money and a Short Sale is the perfect alternative to eliminate these accrued assets.

Keep in mind, when you are asking the bank to Short Sale your home a Hardship Letter must be created. Take a look at this article to assist you with this letter. Creating Hardship Letters