Banks will accept short sales when the payments are late and homeowners can prove that they can no longer afford the property, some banks require the foreclosure notice to be severed while others require just a few payments to be late. No specific number of payments must be delinquent; even one payment is enough at times for most homeowners, selling for less than what they owe may not be the most preferable solution to the foreclosure.
A short sale is however, much better than going through the entire foreclosure process, through the courts and sheriff sales, and can have a positive impact on the former owner’s credit once the sale is completed.
Instead of a full foreclosure showing on the credit history, the mortgage will be reflected as having been paid off and closed but with a settlement accepted for less than the total amount, which in turn looks better to future creditors rather than a foreclosure.
A misconception that most homeowners make is when the bank forecloses they no longer owe for the debit. The bank may be able to sue the borrowers and seek a deficiency judgement against the former homeowners.
Why bankers should be willing to do short sales.
When a bank has too many loans in default, their lending power is weak. Every defaulting loan is like a black mark on their credit report. The bank becomes a high risk for investors, and their ability to make money decreases.
One thing to remember the banks are in the loaning money business. When the banks see a loan is in default, they are happy to try to get the non-preforming loan off their books. The only way for them to remove the loan is to consider a short sale and take less than what is actually owed.
When a bank actually has to foreclose on a homeowner according to Larry B. Litton Jr. , President and Chief Executive of Litton Loan Servicing in Houston, state on MSNBC, banks lose an average of 40 percent of the values of a loan in foreclosures and also has to pay the taxes and other expenses on the property. Litton states “The larger the loss of values and the grater the likely loss will be, the more flexible we are.”
For homeowners if you find yourself facing foreclosure you should definitely be proactive and consider a short sale.
Sitting back and thinking your house will never sell in this market is wrong. There are investors out there looking to buy properties at a discounted amount. Your home needs to be properly marketed as a short sale from someone who has the experience in dealing with the banks.
Lenders are relying on REALTORS® for their creative and innovative way to market and sell the property. Lenders look for industry reputation, experience and commitment to confidentiality. They want REALTORS® who have working knowledge on the short sale process.
I have participated in many transactions that are short sales or foreclosure situations. I would love to help you if you are considering this route. Please contact me for a confidential consultation.
Lisa Bennett
Atlanta Fine Homes Sotheby’s International Realty
678.531.2996
404.835.9600
lisabennett@atlantafinehomes.com