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Understanding How a Short Sale Can Stop Foreclosure
By Vic Hurlstorm | September 22, 2009
One way to avoid foreclosure is to do a short sale. When there is no hope that a homeowner can pay his or her mortgage payments, a real estate short sale may be a viable solution for the homeowner. You do not have to be late on your mortgage payments to start the short sale process. Find out what is a short sale and ask your Realtor early about the possibility of doing a short sale when you think that you will not be able to keep up with house payments soon.
Understanding What a Short Sale is
A short sale is defined as a real estate sale in which the proceeds from the sale fall short of the mortgage balance left on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship experienced by the mortgagor. This negotiation is all done through the bank’s loss mitigation department.
Stopping Foreclosure
A short sale is frequently done to stop foreclosure. A bank often will allow a short sale if they believe that it will result in a smaller financial loss than going through with the foreclosure process as there are carrying costs that are associated with a foreclosure. A short sale is often faster and less costly than a foreclosure. In short, a short sale is just a process of negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. The process does not wipe off the remaining mortgage balance unless the bank expressedly states it in writing.
Learning about Short Sale
There are many books written about short sale. Some books are for homeowners facing foreclosure. These books explain to them what a short sale is and how it can help them save their properties from foreclosure. There are also books aimed at real estate investors wanting to take advantage of the foreclosure market. Foreclosed homes are generally cheap so new home buyers and new real estate investors can buy them fairly easily. Examples of books on short sale are The Art of the Short Sale, Short sales: An Ethical Approach, Doctor Foreclosure: The Secret to a Successful Short Sale, and Short Sale: A Practical Approach.
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