Short Sale Solution To Foreclosure Problem

Posted in Foreclosure, February 11th, 2008 |

When there is no other option left the best thing is to opt for short sale – this being much better than waiting to be culled by foreclosures. A short sale benefits both the borrower and the lender. As foreclosures continue to march across the country more and more of the affected are turning to short sales for succour.

The lender has to give permission for the short sale to be executed. With the falling real estate market the lender today is more than willing to scramble out of time and money consuming foreclosure and get whatever can be salvaged of the loan. Usually the value of the house falls to a lower level than the loan . In a short sale the house is sold by the borrower for the less amount. The balance is either forgiven by the lender or the borrower is asked to pay it back later. By walking away from the house without the stigma of a foreclosure the borrower is able to save his or her credit record.

The previous year saw 2.2 million foreclosure listings across the country. It was about 80% increase from 2006. Banks are now reluctant to pursue the foreclosure route as an average one costs about $40,000 dollars. Thus a short sale seems to be working out best for both. It does reduce the credit rating somewhat but not as badly as a foreclosure stain.

The borrower has to convince the lender about inability to pay enhanced interest. It will need paper work and documentation to prove income levels. The next and most important step is to find a willing buyer. For this it is better to take the help of real estate professionals. Once the buyer has been found the ball is back in the court of the lender who has now to approve the deal. Thus it is most important to keep communication lines open and amicable with the lender. In the long run it will make things easy.

If the short sale operation cannot be executed then the next option is handing over the title in lieu of foreclosure or foreclosure itself. Needless to add this will badly affect credit ratings.
Thus the house is the most important asset one can have. Due attention must be paid to it and as soon as financial strains show up start acting without delay.