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Short Sale vs. Foreclosure
WHY DO LENDERS CONSIDER SHORT SALE VS. FORECLOSURE?
Right now we are living in an incredible times. Foreclosures are high and expected to double up in the next two years. Sub-prime lenders are bending over backwards in a real life game of twister providing incredible methods and programs to finance home buyers with less than perfect credit. Foreclosure cost thousands of dollars and months of time to complete.
Bank short sale in order to liquidate a property quickly, release money into the reserves and make their stocks looks better to their investors. Banks are in the business of making loans and collecting payments with interest. Most of them do not want to become PROPERTY MANAGERS!
It is most often in the banks best interest to liquidate a property as a loss. They are going to lose money almost everytime, so why not lose the LEAST AMOUNT OF MONEY?
WHAT HAPPENS TO THE HOMEOWNER AFTER FORECLOSURE?
If the foreclosure process is completed, the homeowners credit can be ruined between seven to ten years. Not only does this hurt the homeowner's chance of obtaining financing approval for credit, but it ultimately cost them thousands of dollars in interest due to their credit being considered a high risk or liability to the lenders.
After foreclosure, the lender may choose to either write off the loan, or they can sue for a deficiency judgement within the next 4 years. Which means that the lender sues the homeowner for the difference between the property sold for at the auction and what is owed to the lender. The lender could take further action against the homeowner if they want to pursue the deficiency judgement and garnish wages. Sometimes the lender elects to write off the judgement without pursuing a payback but the money is considered taxable income to the IRS. Homeowner would receive a 1099 Form at the end of the year from the lender for that difference and would pay taxes on it.
For more information about Federal Mortgage Forgiveness Debt Relief Act of 2007 signed by Former President George W. Bush is now extended to 2012 by EMERGENCY STABILIZATION ACT of 2008 (please refer this to a licensed CPA for taxes affecting your real estate) We have referrals available for you. Or contact me : janesellscalifornia@gmail.com
530-224-6724/530-339-0180
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