Posts Tagged Short Sale

Is the short sale only way to stop Foreclosure?

The foreclosure is the curse of financial life for an individual especially in this present economic crisis. The foreclosure happens when the borrower failed to pay the mortgage and snatches 7 years of financial carrier to make the borrower’s life worst. The foreclosure is a legal process in which the lender takes possession of the mortgage house with full interest against the clearance of the default mortgage loan of the borrower. The borrower loses everything whenever they fail into the trap of foreclosure so they always like to somehow escape from it to save their house.

The most famous way to stop foreclosure is the short sale but everybody knows that the short sale is the same thing for the borrower. The short sale is a sale of the real assets in which the lender accept short payment by selling mortgage property to clear off the mortgage loan. Although the short sale is the most safe way to save yourself from foreclosure, the short sale also make effect on credit score as well as financial carrier for more than 3 year after the short sale. There are some other ways of avoiding foreclosure.

The deed in- lieu of foreclosure is another good way to stop foreclosure. The deed in lieu of foreclosure is the legal deed instrument by which the borrower can transfer the ownership of property to the name of lender directly in against the clearance of the default loan. You can also find any last stage mortgage refinancing lender who can refinance your mortgage with some extra fees as you can avoid the foreclosure. The bankruptcy is another way to avoid foreclosure but it is so harmful to your financial carrier.

In different states of America the different way of avoiding foreclosure is used for stop foreclosure. Nowadays the short sale is the main option to getting quick solution of foreclosure. You can choose the best way to avoid the foreclosure among the above all option.

The short sale is a selling process of real property when the homeowner fall short of the balance owed on his mortgage loan and the lender decide to sale the property to recover the loss on mortgage in stead of filling foreclosure. Many homeowners like to sale their home quickly in order to avoid the foreclosure process on failure of payment of the loan. The short sale occurs with the both parties’ agreement which is that the borrower has not obliged to pay the remaining balance of the mortgage loan.


As a result of financial hardship of the homeowner the lender or the bank allows the homeowner to money off the balance owed on the loan but it is offered before issuance of the Notice of Default. The homeowner allows selling the mortgaged property for the price which is less then the outstanding balance of the loan. the lender wish to short sale the mortgage property incurring little loss because some heavy fees become a burden on lenders for processing to foreclosure activities instead of short sale and the borrower get a relief from the obligation to pay off the balance of the mortgage loan and also the borrower get benefit of untouched and undamaged credit history by the foreclosure effect. All lenders have a loss mitigation department in which the lenders check the potentiality of the short sale event and evaluate the apprise value of the mortgage property and then the lender decide to short sale.

This short sale is a faster and less expensive solution of defaulting mortgage loan and avoiding foreclosure.  This short sale is also less expensive form the foreclosure process so more lender is willing to choose to short sale if the can determine good selling price from an appraisal.

What is a short sale?

If you sell your house in less than the amount that you owe to your lender then it is called a short sale. Short sale is one of the most effective ways to avoid foreclosure. In that case the lender has to agree or give you his consent before you sell the property. So when you face problem to make your monthly mortgage payments and if it seems it is almost impossible for you to make these payment and short sale is the only way that you can save your credit or avoid foreclosure then contact your lender as soon as possible.

If the lender finds that you are really in trouble then he may be grant you for the short sale. The plus points of short sale are that in most cases the lender does not come after you for the deficiency judgment. Short sale does not even affect your credit report much. It will drop your credit score by 120 to 150 points and you may be even able to get a new mortgage after eighteen months if you can make payments to all your other monthly bills.

If your lender forgives the deficiency amount that you owe to the lender even after the short sale. Then you may have tom pay tax to the IRS as that amount will be considered as your income and it will be also be recorded in your credit report. To know how much Tax you need to pay, you can contact any Tax Official in your County.