Short Sales are not Guaranteed!
It’s important to be aware that your lender has absolutely no obligation to agree to a short sale. Also, there are a handful of banks that will agree to a short sale if the homeowner is current however, most banks won’t even consider it unless the homeowner is at least 30 days past due on their mortgage payment. Either way, it goes, you just won’t know whether or not your lender will accept a short sale until you try. You should also know that a short sale can take several months and even a year to complete depending on who the mortgage holder is and what type of loan it is.
In the event that your lender does not agree to a short sale, there are several other options available to you in the event that your lender doesn’t agree to a short sale.
Other options besides a short sale
1- Loan Modification– This is when the lender adjusts the terms of your loan by either adjusting the principal balance of the note or by lowering the monthly payment to make it more affordable to the homeowner. Most of the time the terms of a loan modification aren’t worth agreeing to.
2- Deed-in-Lieu- This is the process by which the homeowner signs the property back over to the lender and this is also considered by many a voluntary foreclosure. Unfortunately, it also shows up on your credit as a foreclosure.
3-Bankruptcy- There are two different types of bankruptcy; Chapter 7 and chapter 13. Since I am not an attorney I will just give you the basics. A chapter 7 bankruptcy is the liquidation of assets so that debtors can get paid a portion of what’s owed to them and a Chapter 13 is basically a reorganization of debts in which the debtor has a chance to work out an arrangement with his or her debt holders.
4- Let it go to Foreclosure- This is one option that I would never recommend to anyone. If you just let the property go to foreclosure, then you’re just giving up and when you give up, you give up all control of your situation. There’s a common belief that if you let your property go to foreclosure, all of your debt will be forgiven and that couldn’t be further from the truth. As a matter of fact, the opposite will probably happen and the lender will slap you with a deficiency judgment between what you owe the lender and what the property sold for at the auction.
If you or someone you know is behind on their mortgage, consult with a short sale expert and find out what the best option for you is.
