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Is a Short Sale a Good Alternative to Home Foreclosure?

Posted on in Foreclosure

Waukegan IL short sale attorneyMany people and families throughout the United States are struggling with debt, especially during the COVID-19 pandemic, which has resulted in the loss of jobs, reductions in the income that people are able to earn, and other financial difficulties. Homeowners who are struggling to pay ongoing expenses may be concerned about what will happen if they default on their mortgage, including whether they may face foreclosure. While some homeowners may be able to avoid foreclosure through a loan modification, others may find that they will be unable to avoid losing their home. In these cases, a short sale can sometimes be beneficial.

What Is a Short Sale?

A homeowner may owe more on their mortgage than their home is actually worth. If the homeowner is experiencing financial hardship, they may be able to sell their home at a fair price and avoid owing additional money to their mortgage lender. In many cases, a lender will need to approve a short sale, although it may be possible to complete a transaction without lender approval.

Short sales can provide multiple benefits to those who are unable to make mortgage payments, including:

  • Avoiding a deficiency judgment - During foreclosure, a home will be sold by the lender, but the sale price will usually be less than the amount owed on the mortgage. The lender may attempt to collect any additional amount owed through a deficiency judgment. In a short sale, a lender may forgive the deficiency, allowing a seller to avoid further debts.

  • Better credit scores - A foreclosure will usually remain on a person’s credit report for five to seven years. However, a short sale will often have a less negative impact on a credit score, and a seller may be able to obtain new loans in a shorter period of time.

  • Financial assistance - Sellers may be able to participate in the Home Affordable Foreclosure Alternatives (HAFA) Program or a program through a mortgage lender that will provide them with financial help as they transition to more affordable housing options.

Contact Our Lake Forest Short Sale Attorneys

If you are facing the loss of your home, the attorneys of Newland & Newland, LLP can help you understand your options. If you are unable to avoid foreclosure through a loan modification, we can help you determine whether you can complete a short sale. During a short sale, we will negotiate with your mortgage lender to ensure that you will not owe any additional money while helping you understand how this sale will affect your taxes, and we will help you determine whether you qualify for financial assistance programs. We will work with you to make sure you and your family will be in a better financial position going forward. To arrange a free consultation, contact our Round Lake real estate lawyers today by calling 847-549-0000.

 

Sources:

https://www.investopedia.com/terms/r/real-estate-short-sale.asp

https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.jsp

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