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Understanding How a Short Sale Can Stop Foreclosure
By Vic Hurlstorm | September 22, 2009
A short sale can help a homeowner in foreclosure. When a homeowner has no way of paying his or her mortgage payments, a real estate short sale may be a sound solution for the homeowner. You do not have to wait until you are late on your house payments to begin the short sale process. Learn about what is a short sale and ask your Realtor early about the possibility of doing a short sale when you know that you will not be able to keep up with mortgage payments soon.
Understanding What a Short Sale is
A short sale is a sale of real estate in which the proceeds from the sale are smaller than the 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 on the part of the mortgagor. This negotiation is almost always done through communication with a bank’s loss mitigation department.
Stopping Foreclosure
A short sale is usually done to stop foreclosure. A bank often will allow a short sale if they think that it will result in less financial loss than foreclosing as there are carrying costs associated with a foreclosure. A short sale is usually faster and less expensive than a foreclosure. In short, a short sale is nothing more than 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 balance unless state laws require it.
Learning about Short Sale
There are plenty of books on the subject of short sale. Some books are aimed at homeowners who are in 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 for investors trying to take advantage of the foreclosure market. Foreclosed homes are often 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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