Foreclosures are still a major problem for the real estate market. On the plus side, the situation is being addressed in various ways; the most prominent of these being the major housing law that seeks to stop foreclosures and keep major mortgage lenders like Fannie Mae and Freddie Mac afloat.
Most homeowners who are struggling with unmanageable mortgage payments often find themselves with no choice but to foreclose on their South Florida homes instead of exploring what other options might be available. The following options may not prevent a negative effect on a homeowner’s credit score or the loss of the home itself but they do remove the majority of the legalities and hassles involved in the foreclosure process.
Short sales have become very popular with realtors who have been taking advantage of foreclosure properties. In this scenario, the home is sold for less than what was owed on the mortgage at a reasonable market value. The other option involves giving the property over to the lender instead of waiting for it to eventually foreclose with the same stipulation of getting rid of the debt for less than what was owed, essentially placing the responsibility on the lender to sell the home.
The perk of these two options is they allow the former homeowner to pretty much walk away from their mortgage and thus have some peace of mind while avoiding the legal process usually involved in foreclosures. Short sales also work in the borrower’s favor by reducing the timeframe to obtain a new mortgage the next time they’re in the market for a Miami Beach condo or home. Short sales also reduce the chances of being instantly turned down for a new loan considerably.
In the end, both options will still bring a credit score down considerably but they present better long term prospects than foreclosures normally do. With the major foreclosure prevention law about to be passed, hopefully foreclosures will start to become less of a problem than they are now.