Monday, June 28, 2010
I spoke to a seller of a home yesterday. She had not paid her mortgage in TWO years! (Actually this is not that unheard of) Interestingly enough, the bank has not wanted to foreclose on the property - think "shadow inventory" here. She decides to move back in to the home to offer it for sale as a short sale in order to "save her credit". Ummm... hello... a short sale will not save your credit if you haven't been making payments for 2 years - I imagine the credit is devastated at this point. The difference between the points hit on a short sale and a foreclosure for this client are minimal. For someone who just missed his first payment on a mortgage and is concerned to limit credit score hit - then a short sale would be preferable over a foreclosure. Keep in mind, the right kind of short sale is what we strive to achieve. The right kind would be a non-deficiency statement from the lender which states that no further collection will happen and the bank is satisfied with the short sale proceeds. Each case is different and each is worth taking the time to review with an attorney, CPA and an experienced foreclosure alternative Realtor.