|
Featured
Article
The
Benefits Of A Short Sale
Article contributed by
ML
Properties
Michelle Lyn Manley, Broker/Owner
With the current depressed local real estate
market in Orange County and the nationwide mortgage
loan crisis, numerous homeowners in Orange County
are finding themselves not able to keep up with
their rising mortgage payments, and often the
mortgage loan debt is higher than the home's
value. This equates to zero equity in the property.
Consequently, homeowners are unable to refinance
or sell the home under normal selling conditions.
When this is the case, many homeowners will,
unfortunately, give up and let their property
go to foreclosure. They are unaware that there
is a much better option than foreclosure for
them…it's called a short sale. The fact is,
in California now, over 50% of mortgage loan
foreclosure solutions with banks are resolved
through the short sale method. During the short
sale process, the homeowners agent will negotiate
with their lender on behalf of the borrower
and will work on convincing the lender to reduce
the loan balance thus allowing the home to be
sold to a buyer and avoiding foreclosure.
Some
of the benefits, which many homeowners are unaware
of are: (1) A short sale is NOT reported on
credit history. There is no specific reporting
item for short sale and the loan is typically
reported "paid in full, settled." On the other
hand, a foreclosure will remain as a public
record on a person's credit history for at least
10 years; (2) Credit/FICO score is better with
a short sale vs. a foreclosure. A foreclosure
will more negatively affect one's FICO score
and could lower it anywhere from 250 to over
300 points. Additionally, one's credit score
with a foreclosure will be affected for over
3 years, whereas with a short sale, it can be
as brief as 12-18 months; (3) The time period
is shorter for obtaining a new loan with a short
sale. A homeowner who successfully negotiates
and closes a short sale will be eligible for
a Fannie Mae backed mortgage after only 2 years,
whereas a homeowner who loses their home to
foreclosure would be ineligible for a Fannie
Mae backed mortgage for a period of 7 years.
(4) A short sale does not challenge most security
clearances, whereas a foreclosure is the most
challenging issue against a security clearance
outside of a conviction of a serious misdemeanor
or felony. If a borrower has a foreclosure and
is a police officer, in the military, in the
CIA, security, or any other position that requires
a security clearance, in almost all cases, clearance
will be revoked and position will be terminated;
(5) A short sale is not reported on a credit
report and is therefore not a challenge to current
or future employment, whereas a foreclosure
in many cases is ground for immediate reassignment
or termination. Employers have the right and
are actively checking the credit regularly of
all employees who are in sensitive positions;
(6)
With
short sales, it is possible to convince the
lender to give up the right to pursue a deficiency
judgement against the homeowner, whereas 100%
of foreclosures (except in those states where
there is no deficiency), the bank has the right
to pursue a deficiency judgement. These benefits
are extremely important for the average homeowner
to be aware of so they can know they have options
and plan accordingly if need be. The number
of consumers with delinquent mortgages is poised
to almost double (from 2008) by the end of 2009,
hitting it's highest level in at least 16 years,
according to TransUnion. More and more borrowers
are going to need to sell their home on a short
sale and will need to secure an experienced
(preferably certified) short sale expert to
help them accomplish this task.
Article
submitted by:
Michelle
Lyn Manley
Broker-Owner of ML Properties
www.orangecountyagent.net/orange-county-shortsale.php
|
