Homeowners who are faced with staggering mortgage debt often are uncertain what options other than foreclosure are available to them. Oftentimes, they are unable to negotiate with their lender for a variety of reasons. In these instances, working with a real estate attorney with experience negotiating short sales is an option.
Understanding Short Sales
Fannie Mae defines a short sale as “.. a pre-foreclosure sale, is when you sell your home for less than the balance remaining on your mortgage.”. While not every person who is facing foreclosure may be a candidate for a short sale, you may be a candidate if:
- Loan modification is not an option
- You are unable to keep up with your current mortgage payments
- Your home cannot be sold for at least your outstanding mortgage balance
- Your financial situation is not likely to improve
Your real estate attorney would work with your mortgage company to work out an acceptable sale price. Once that price has been established, the mortgage company, you and your attorney and a qualified real estate professional would work with you to sell your home at the agreed upon price.
Potential Pitfalls of Short Sales
Like foreclosure, a short sale will not preserve your credit rating. However, for most consumers, the reduction in credit scores will be significantly less with a short sale versus a foreclosure. Some of the other things you need to be aware of include:
- Debt forgiveness – in effect when your lender agrees to accept less than what you owe on your home, you may be taxed on the amount of the loan that is forgiven.
- Deficiency judgment – your lender may hold you responsible for the amount they are losing based on the sale price. A qualified real estate attorney can help negotiate with the lender to have this option waived.
- Time constraints – the short sale process is not an easy one and could take as long as four months or more. Should housing market values change, it could make the process even more complicated.
Making a decision to sell your home versus going into foreclosure is not easy. However, for many homeowners, this is a viable option. If you are considering a short sale or you have been notified your lender is preparing to begin foreclosure proceedings, contact ThorburnWalker LLC at 303-646-3482. We have successfully assisted homeowners in the Denver Metropolitan area, Front Range, Mountain towns, Western Slope, Southern Colorado Arizona, Utah, California, Washington and Oregon negotiate successful short sales.