WHY CHOOSE A SHORT SALE Vs. FORECLOSURE?
If a homeowner is unable to pay thier mortgage payment, it’s more beneficial for them to do a short sale, rather than just walking away and allowing the bank to foreclose.
A foreclosure is considered to be an abandonment of debt, by banks. A foreclosure is held against a homeowner / borrower by future creditors, landlords, and in some cases even employers - for several years.
In addition to negative credit score implications for a foreclosure, any 2nd or 3rd position lender can file a “deficiency judgment” and sue the homeowner for their losses, during the foreclosure process. At that point, a bankruptcy is generally the only salvation.
A homeowner should hire a short sale specialist (licensed RE Broker) who is experienced and has had success negotiating ALL debts and liens associated with the home – and make sure all the liens are settled at the time of sale. This will release the homeowner from all liability, under our current debt forgiveness Federal and State laws.
Note: our political and governmental climate for short sale tolerance seems to be shifting. This means homeowners should make haste if they are contemplating a short sale.
Lastly, I am not a CPA nor an attorney. I am a licensed CA Real Estate Broker, specializing in short sales in Ventura County. Please seek the advice of a CPA or an attorney for specific tax implications.
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