Foreclosure is the legal process of selling property to satisfy a defaulting borrower's debt secured by that property. Most foreclosures in California are private trustee's sales, rather than judicial foreclosures. A trustee's sale is a public auction for selling property to the highest bidder-a quick and cost-effective process for the lender.
However, if the foreclosure sales price is not enough to pay off the loan being foreclosed upon, the foreclosing lender cannot recover that shortage (also known as a deficiency judgment) from the borrower.
Foreclosures, short sales, home equity sales have always been connected to the real estate landscape. In the past they have accounted for less then five percent of the overall sales. In today's real estate landscape, these types of sales have become a much larger percentage of the overall property sales. In some areas they may be up to 40-60% of the for sale inventory. At HopeOptions4You.com we know not all homes that go into default need to go into foreclosure. Our goal is to help as many as we can sell before the notice of default is finalized.
Not for the faint of heart
However, it is not for the faint of heart. Distressed home sales are often complicated and we are here to help you in minimizing the complicated tasks that a foreclosure situation brings about.
You can get Help and have Options.....don't ignore the problem
It's all too common for sellers in foreclosure to want to ignore the problem and hope it will go away. Some stick their heads in the sand. But help is available. Sellers in foreclosure have options. However, the key is start getting the answers today, and do not wait....tomorrow comes faster then we think in times of stress.
We would love to talk with you face to face to discuss the options available to you. However, we also request you do your homework and review your situation with a real estate attorney and/or tax expert to make sure the option that you have chosen is best for you. Each circumstance is different. Each loan, family and situation is unique and "one size does not fit all."
To receive more information or schedule an appointment by email please click the Contact Us button on the left menu.
Below is a short table showing some of the different issues between a Foreclosure and Short Sale:
| Issue |
Foreclosure |
Successful Short Sale |
|
Future Fannie Mae Loan - Primary Residence
(effective |
A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. |
A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years. |
|
Future Fannie Mae Loan - Non Primary
(effective 2008) |
An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years. |
An investor who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed investment mortgage after only 2 years. |
|
Future Loan with any Mortgage Company |
On any future 1003 application, a prospective borrower will have to answer YES to question C in Section VIII of the standard 1003 that asks "Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?" this will affect future rates. |
There is no similar declaration or question regarding a short sale. |
|
Credit Score |
Score may be lowered anywhere from 250 to over 300 points. Typically will affect score for over 3 years. |
Only late payments on mortgage will show and after sale mortgage will be reported as paid or negotiated. This will lower the score as little as 50 points if all other payments are being made. A short sale's affect can be a brief as 12 to 18 months. |
|
Credit History |
Foreclosure will remain as a public record on a person's credit history for 10 years or more. |
Short sale is not reported on a credit history. There is no specific reporting item for ‘short Sale'. The loan is typically reported ‘paid in full, settled'. |
|
Security Clearances |
Foreclosure is the most challenging issue against a security clearance outside of a conviction of a serious misdemeanor or felony. If a client 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. |
A Short Sale on its own does not challenge most security clearances. |
|
Current Employment |
Employers have the right and are actively checking the credit regularly of all employees who are in sensitive positions. A foreclosure in many cases is ground for immediate reassignment or termination. |
A short sale is not reported on a credit report and is therefore not a challenge to employment. |
|
Future Employment |
Many employers are requiring credit checks on all job applicants. A foreclosure is one of the most detrimental credit items an applicant can have and in most cases will challenge employment. |
A short sale is not reported on a credit report and is therefore not a challenge to employment. |
|
Deficiency Judgment |
In 100% of foreclosures (except in those states where there is no deficiency) the bank has the right to pursue a deficiency judgment. |
In some successful short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner. |
|
Deficiency Judgment (amount) |
In a foreclosure the home will have to go through an REO process if it does not sell at auction. In most cases this will result in a lower sales price and longer time to sale in a declining market. This will result in a higher possible deficiency judgment. |
In a properly managed short sale the home is sold at a price that should be close to market value and in almost all cases will be better than an REO sale resulting in a lower deficiency. |
HopeOptions4You.com assumes no responsibility nor guarantees the accuracy of this document. HopeOptions4You is not engaged in the practice of law nor give legal advice.
No Cookie Cutter Solutions, We Know Each Situation Is Unique
If we can help please feel free to contact us. We would love to talk with you face to face to discuss the options available to you. We also recognize that every situation is unique and has special circumstances. We don't have a "cookie cutter" approach to your situation and each circumstance is different. Each loan, family and situation is unique and "one size does not fit all."
We will treat you as a person and will give you the best our team has to offer. We would love to help you discover the options and the best option for you- but talk with an attorney and/or tax expert before, during and after talking with us to make sure you know how your decision(s) will impact you now and in the future.
CONTACT US
To receive more information or schedule an appointment by email please click the Contact Us button on the left menu.
