When homeowners begin defaulting on their mortgages, they risk foreclosure of their property by the lender. An alternative to a lengthy and stressful foreclosure process is a short sale, or the opportunity for a homeowner to sell their house for less money than he or she actually owes on the mortgage. The lender takes a loss on the loan they extended to the homeowner, but in return prevents further losses and the need to go through the entirety of the foreclosure process. This can happen only if the lender approves a discount on the mortgage and agrees to receive less money from you than you previously owed.
Why would a lender agree to a short sale?
It is in the trustee’s (lender’s) best interest to have their money earning interest by means of loans. However, a home that they foreclosed on is a “non-performing asset” in the sense that they have nothing to gain from a property that they hold on to. If a homeowner is able to do a short sale on their property, it means the bank is able to recoup at least most of their loan and put that money back into circulation in order to resume earning interest on it. Additionally, if the bank is aware of any financial hardship on behalf of the homeowner (loss of job, family issues, or injury), then they are more likely to move ahead with a short sale.
How do I know if a short sale is right in my case?
If you would like more information on whether a short sale is good choice for you, please contact Pak & Moring to discuss your situation, and see if we can help you through this process. Not all candidates for short sales are identical, and seeking consultation could be very beneficial in order to make the process go smoother.