Homeowners are experiencing financial hardships and can no longer make their mortgage payment because of either a job loss, divorce, or an option ARM that’s resetting higher. Unfortunately most people give up and believe the only option is signing away ownership in a manner that destroys credit, embarrasses the family and strips an owner of dignity by either filing for bankruptcy or letting the bank foreclose.
There is an alternative...
What can you do to save yourself the pain and headache of bankruptcy or foreclosure while saving your credit score?
Experts are advocating a “short sale” wherein a lender has agreed to accept less than the total amount due.
This is a case of a distinction with a difference: If your bank agrees to a short sale, you then hire an agent to find a buyer for the house, you sell the house for a loss, and with the bank’s blessing, they agree to eat the loss, although they could still demand the homeowner make some kind of payment or share the loss.
That’s the really short version of how a short sale works.
Lenders are becoming more flexible
More and more lenders are willing to make accommodations to avoid taking the property back. Banks hate to take over homes, especially in a declining market, so you shouldn't underestimate the willingness of a bank to make concessions. Remember if you just foreclose, the property is now the responsibility of the lender or bank, and (especially in today's market) that is a responsibility a bank or lender wants to avoid almost a much as the homeowner wants to avoid foreclosure. Remember though there are still rules and regulations to Short sales and not every seller will qualify for a real estate short sale.
