Short sale or Foreclosure??
I have had that conversation 3 times this weekend. It’s a tough one to have. It is something that is misunderstood and I want to clear up a big misconception.
Everyone I talk to about it seems to think that the worst part of a foreclosure is over after the sale on the court house steps. Yes, it will damage your credit but the bank takes the house and that’s it.
Not True.
By filing one single motion with the court the lender (investor really) has the right to pursue the borrower for the deficit (difference between what’s owed and what it ultimately sells for) for 20 years. They can sue you for the deficit and presuming they win they can come after you for the difference via garnishments, seizing bank accounts and tax refunds and a host of other ways. The end of that story is usually bankruptcy. I mean, when the investor comes to get $100,000 and you can’t pay it I would say you’re bankrupt.
The best solution in most cases is short sale. Yes, it’s a hassle. The uncertainty is a a sleep stealer. You have to show your financials to the lender and you might have to pay something (usually via a promissory note) to do the deal but the benefits are many.
There will be no deficit to collect. You agree with the bank to settle for the amount of the sale.
The house sells for more money and that protects property values. Foreclosed homes sell for less and that is slowing the recovery and damaging your neighbors values for a longer time than it has to.
Your credit is damaged less and heals faster than if you do a foreclosure and bankruptcy. A lot faster. Two years and the ability to get a now loan returns after a short sale. Foreclosures take at least 3 years in most cases and 5 in some. It is on your credit report for 7 years. Bankruptcy will be on your credit for 10 years and when asked on an application if you have ever filed bankruptcy you will have to say ‘yes’ for the rest of your life. A short sale may not even show up depending on how the lender files it.
The bottom line is that a short sale will usually be the best solution to the problem of losing the house. If you are struggling with this stuff and need someone to talk to please call me. I really can help and I am happy to.
There is a lot of bad info out there and there are people looking to make a buck off the problems so be careful who you call. Don’t give anyone money to do a short sale and don’t pay for promises to modify your loan or ‘make it go away’ because those are folks just trying to take your money.
I am here to help so if you or someone you know needs some straight answers, give me a call.
Thanks for listening,
Jerry Robertson
678-231-1578 Cell