Foreclosure vs. Short Sale
When a borrower is unable to pay the mortgage payment for a consecutive period of time, the lender then put the property for auction to handover the ownership so that a certain amount can be recouped. This process is called foreclosure auction.
If the borrower finds it difficult to pay the mortgage amount month after month, he or she then tries to sell the property at a lesser amount compared to owed mortgage amount. This certainly requires the consent of the lender. This process is known as short sale.
What is the steps to Foreclosure?
- If a borrower fails to pay the mortgage amount consecutively for 3 to 6 months, the foreclosure process is initiated by the lender.
- Initially, the lender issues a notice with the County Recorder’s Office mentioning the mortgage default by the borrower.
- The borrower now is given grace period to solve the matter with the lender or short sale the house. The grace period can range from 30 days to 120 days.
- If the matter is not resolved during the grace period, the property then put in for foreclosure auction.
- If no buyer is found during the auction process, the property then is owned by the lender.
What is the steps to Short Sale?
- The seller, initially, makes an agreement with a real estate agent to short sale the property with the approval from the lender.
- It is the responsibility of the agent then to find out a buyer who will offer a value that is close to the present market value of the property.
- If the offered value is agreed by the seller, then he or she approaches to the lender.
- If both the parties are agreed over the value, then the buyer can buy the property.
- The short sale is completed when the amount is paid by the buyer, the lien is released by the lender and the seller provides the deed.
How can I prevent Foreclosure?
There are various ways through which any defaulter can prevent a foreclosure. However, this requires proper guidance and knowledge which is only available through an experienced and honest realtor. The borrowers should be aware of their mortgage rights first.
We are one of the most reliable and experienced realtors in Sacramento, California. And we have been offering assistance to people with foreclosure.
Why is it important to stop Foreclosure?
If the owner of the property is unable to pay the mortgage for some temporary obligations, then foreclosure may cause losing the property forever. But if that can be stopped anyway, the borrower may enjoy it later.
A number of ways are available out there that can stop the foreclosure process and filing bankruptcy is one of them.
Why choose us?
For all foreclosure related concerns, if you are looking for a permanent solution, we are your best option. We have been offering assistance to people dealing with foreclosure for decades with a great success rate.
How can filing Bankruptcy prevent Foreclosure?
There are certain legal procedures that prevent the lender to take any further action related to foreclosure and filing bankruptcy is one of them. This puts a temporary halt to the process. Though, it is advised to the borrowers to file bankruptcy in the accurate type for optimum advantage.
What is loan modification, and how can I qualify?
Mortgage loan modification is another process that can offer an alternative to the foreclosure process. The borrower can talk to the lender in advance to re arrange the mortgage payment so that it can be affordably paid.
It is advised to talk to a reliable realtor before filing bankruptcy since improper filing will do less help than required.
What is deed-in-lieu of foreclosure?
This is a post foreclosure procedure. When the process of ownership handover is complete, then an agreement is made between the lender and the borrower. This clearly states that the borrower is no way responsible for any future liability of the property.
5 Most Important Questions to Ask Short Sale Sellers:
It is very important to confirm at the very first stage if you are willing to enter into the foreclosure process. The borrower may not always know the answer. But you should perform the due diligence through the thorough review of public records. Borrower can opt for loan modification or short sale but these two cannot be performed together.
The borrowers can go for a loan modification if they want to. However, they should have a clear idea that a higher debt-to-income ratio will likely to reduce the chance of any modification in the mortgage payment.
It is very logical, if the hardship of the borrower is temporary, then he or she can apply for loan modification. And it should be done before the short sale listing. For a few months struggle, there is no point going through the hustles of short sale and waiting for the reply from the lender’s end.
Sometimes, borrowers are desperate to get rid of the property anyway. So, for them a loan modification won’t do much favor. So, coming out with the exact reason for selling the property is always helpful for the buyers.
There are multiple options available to deal with this issue like short sale, foreclosure, deed-in-lieu of foreclosure, filing bankruptcy, loan modification etc. You should always ask the seller whether he or she is aware of all these options. You can also confirm if the borrower has consulted any realtor for assistance. It is always preferable to be transparent throughout the process from initiation.