Short Sales

Foreclosure proceedings begin once a borrower has skipped three (3) or more mortgage payments. Lenders will record a notice of default against the property in default. Unless that debt is satisfied, the lender will proceed to foreclosure of the property and set up a trustee sale. For obvious reasons, Foreclosures can have a significant impact on the borrower's credit score and ability to obtain a mortgage in the future. Short Sales can sometimes be a good option for borrowers who wish to avoid Foreclosure, if the lender is willing to settle the account.

Borrowers can resolve their default status by paying the overdue amount once the notice of default has been recorded, and before the property's sale at public auction. Should the property be sold at auction, the successful bidder is sometimes able to take possession immediately. If the former owner refuses to vacate, the court may issue an unlawful detainer to allow the sheriff to evict them. Borrowers should pursue all options to avoid Foreclosure, which is one of the most damaging credit events and could prevent the borrower from obtaining a mortgage in the future.

Bankruptcies and Foreclosures remain on credit reports for seven (7) to ten (10) years. Some lenders may consider borrowers for a loans sooner, but only if they have re-established a positive credit history. The circumstances surrounding a bankruptcy or foreclosure may influence a lender's decision. For example, if you went through bankruptcy because your employer downsized operations due to the COVID-19 pandemic, lenders may be more sympathetic. However, if you went through bankruptcy or foreclosure proceedings because you overextended personal credit lines and lived beyond your means, lenders will be less likely to be flexible.

If the lender is agreeable, you can sell your home for LESS than the amount owed on the mortgage. This event is known as a "Short Sale." In certain cases, lenders may be willing to "split the difference" between the property's sale price and loan amount, which must be paid. Short Sales may be more complicated if the loan has been sold on the secondary market, because lenders must obtain permission from Fannie Mae or Freddie Mac, whichever of those two major players hold the note. If the loan was a low-down payment mortgage with private mortgage insurance (PMI), then lenders must also involve the mortgage insurance company that insured the loan.

In the current "sellers' market," fewer properties are underwater and borrowers could have sufficient equity to cover the full mortgage amount plus expenses from the sale (e.g. commissions, transfer taxes and fees). BC Adobe Realty agents can provide you with a Comparative Market Analysis (CMA) to determine your property's current market value for FREE. You may be surprised; it could be enough to avoid a Short Sale.