What is a short sale
All about Short Sales
There are times when a mortgager finds that he can no longer pay off the whole loan due to adverse financial problems. In this situation, the bank or the lender may consider it better to settle the affairs by ‘discounting’ the loan balance. This process is known as short sale. In simple terms, you do not have to pay the amount that you borrowed initially.
What’s in it for the Lender?
Even if it is the last resort for the lender, he may consider a short sale in certain cases that we call ‘hardship cases’. This could include permanent disability, financial insolvency, criminal convictions, and layoffs from jobs. In such a scenario, he figures that some money is better than no money!
How about the Bank?
When it comes to real estate, a bank stands to lose more money if it goes in for a foreclosure of a property. There are so many expenses to be considered, like fees for the attorney, costs incurred in selling, eviction and property maintenance etc. Besides, foreclosures have a tendency of dragging on for a longer period of time. So, thinking about all the interest money they could lose, banks usually find in favor of a short sale as the money comes in much sooner.
Does it affect the Borrower Adversely?
If your credit rating is worrying you, don’t be. The loan shows up as paid on your credit report. For all intents and purposes a short sale is better for your credit rating than a foreclosure. There is also a lot of stress and stigma that is associated with a foreclosure. By opting for a short sale, you can save yourself a lot of pain.
Considering the current economic situation, several financial giants have had to consider offers they wouldn’t even look at if all was well. Borrowers, therefore, have a better negotiating power in these times. Fight for better terms than have been offered to you. Chances are that you’ll actually get them.
Should I consider a Loan Modification Department?
Yes. The Loan Modification Department has the technical know-how and can deal with lenders and banks smartly. They can offer valuable advice in restructuring your loans and negotiate for more affordable payments. Most lenders do not take you seriously if you do not have legal aid. With a loan modification attorney backing you up you are going to get the best possible deal. And there’s much less hassle for you.
