Foreclosure: It's Not a Get Out of Jail Free Card
How many times have you heard someone say something to the effect that if their short sale didn't work out as they wanted, that they would just let their home go to foreclosure. By saying that, the implication is that the is no repercussion in allowing a home to go foreclosure. How did that even come to be in society today?
As a Northern Virginia Short Sale Agent, I come across Sellers all the time that think if they can't get their mortgage holders to agree to a Short Sale under the Sellers' terms, then the Sellers will, "Just let it go to foreclosure."
This often comes up if a mortgage company is asking for a cash contribution, or if they are retaining their rights to pursue a deficiency judgment for the unpaid mortgage balance. Here comes the refrain again, "We'll just let it go to foreclosure."
FORECLOSURE IS NOT A GET OUT OF JAIL FREE CARD!
If your mortgage holder is reserving their rights to pursue a deficiency judgment against you, why on earth do you think letting the property slide into foreclosure is going to change that? At that point, there are attorneys fees and other legal costs associated with foreclosing that are now tacked on to your unpaid mortgage debt. Do you honestly think the mortgage company is going to forget about you and NOT pursue a deficiency judgment when you have just cost them even more money?
Short Sales offer a bit of control over determining certain terms with the mortgage holder. For instance, cash contributions can be negotiated to a more affordable amount. Sometimes, they can be negotiated away entirely. It depends on the individual situation.
The important thing to know is that foreclosure doesn't magically wipe the slate clean and let you off the financial hook. Unlike a Short Sale, you just don't see what's happening until the judgment has been leveled and your paycheck is being garnished, or a lien has attached to other real estate you may own.
What a mortgage holder can do when pursuing a deficiency judgment against you for unpaid mortgage debt is determined by state law, so it is advised you speak with an attorney if you find yourself facing a less than desirable Short Sale outcome. The foreclosure outcome may not be as rosy as you think when you hear the legal ramifications.
Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155. To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com. Or you can visit her website: www.nvarealestate.net.
Header photo is the Bristow, VA community of Bramear, taken by Chris Ann Cleland during the blizzards of 2009-2010.
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