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Is A Short Sale The Answer to Our Problems?

By
Real Estate Agent with The Realty Butler llc/West USA Realty, Inc.

Short sales have become the next best step for families who either don't want to modify their mortgages, or who have had an offer of modification that is not financially viable. In fact, many of our clients are reporting that when they contact their loan servicers for the first time to report a hardship, their servicers are directing them to contact an agent to do a short sale. They're not even mentioning a modification.


It looks as though short sales are the new answer to the foreclosure problems we all are facing. With the help of some bailout money, servicers and investors will get a little more financial help, and families will even get a chunk of change to move out of the house when the sale is completed.

Now, moving millions of families out of their homes in a short sale situation is NOT the answer that anyone wanted to hear, but we all knew was coming. Short of just paying everyone's mortgage off in full (which might have actually been a cheaper fix, by the way), there is simply no way to do it. As I've indicated before, this is going to be painful for lots of people, and it's shameful that the system was manipulated in such a way as to allow this to happen.

However, we must move forward and get through this crisis, and the short sale or deed in lieu of foreclosure is really the only way to do it as of now. The short sale in particular will be a big favorite with loan servicers, because they may be able to minimize the costs associated with the foreclosure itself, holding and maintaining the property, and handling the sale of the property. If for no other reason, this makes sense to banks. Also remember that there won't be as many vacant and visibly distressed properties in neighborhoods, and the properties will be maintained by homeowners themselves.

So what's in it for the homeowners? Well, for one, if the new short sale guidelines are followed by loan servicers and are efficiently carried out, we could see families be able to remove themselves from their troubled loans in as little as 60 to 90 days. A few of our most recent deals with JP Morgan Chase have resulted in short sale approval in less than 3 weeks. That's absolutely phenomenal for everyone involved.

Consider this: if a homeowner is smart, and moves into action immediately upon discovering an inevitable hardship, the entire short sale process could be completed in less than 90 days. There will likely be no deficiencies owed, no taxes on losses, minimized credit damage, and no foreclosure on their record. These families could very well be on their way to homeownership again in a short time, at much more sustainable home prices, with low interest rates, and much more security.

I wish there were another way to solve this problem. I really do. For now though, this is the best that we can do in a society where the pursuit of "life, liberty, and happiness (ie, property) still means something. Here's to hoping you never need a short sale expert.

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*Disclaimer: We DO provide loan counseling services and process short sales for our clients, but we DO NOT charge fees. Please also remember: I am NOT an attorney, and neither do I play one on TV or the Internet. None of my opinions should be construed as specific legal advice. If you need specific legal advice regarding your personal situation, ask. Don't "infer".

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