Troubled Borrower's Solution

With more and more people having trouble meeting mortgage payments, there is a solution that will avoid such homeowners getting a foreclosure on their credit record.

It is called a Short Sale and available from most lenders as a preferred alternative to a foreclosure. It is less damaging to the homeowner's credit rating and saves money for the lender. These days most banks are willing to discuss this alternative.

Here are some rules to follow if you decide to take this route:

1) You must be able to show the bank why you are behind on payments and can't catch up.

2) A Realtor must find a buyer for the property and then negotiate with the lender for an acceptable price (this can often be determined before listing the property although any offer will probably be subject to final lender approval). Real estate commissions may be limited.

3) The homeowner should not expect to get any money (equity) from the sale. Although, several years ago, I handled a short sale and the owners ended up with a $1,000 bonus - from Wells Fargo Bank (other banks may differ).

4) A short sale is still a negative credit score entry but less serious than a foreclosure.

5) The homeowner may be required to pay income tax on any forgiven amount.

6) The homeowner should not sign over the property to any group prior to closing. A short sale closes just like any other real estate transaction.

If you or someone you know is faced with this situation you can contact me for further details.

Thanks.

Richard

Richard Haworth
Coldwell Banker Residential Brokerage
602-370-1450