Philadelphia Business Today reported that short sales – real estate sales transactions in which the lender takes a payoff less than the balance owed – are becoming an increasingly common alternative to foreclosure.
With the highly touted federal mortgage-modification program falling short of its target numbers, the government has looked into alternatives to foreclosure and come up with a possible, though not original, solution:
The short sale, a transaction in which the lender accepts less than the balance owed on the mortgage.
Beginning April 5, under new Treasury Department rules, short sales will be presented as the potential next step for homeowners who are rejected by or fail to make the grade for the federal Home Affordable Modification Program (HAMP).
This actually is a great development, because loan modifications are not really the solution they’ve been hyped up to be. Sure, homeowners get lower payments (assuming they get the modification), but nothing is done about the amount owed on the property. In the so-called bubble areas of Florida, California, Nevada, and Arizona, home values have declined so much that some homeowners are underwater hundreds of thousands of dollars. Even if the payment is made affordable by a loan modification, why would a homeowner who is negative by that kind of dollar amount want to continue making payments on their debt indefinitely?
The best solution is to just eliminate the debt and call it a day, and a short sale can be a great vehicle to make that happen. This is not only a good thing for homeowners, but banks and the economy as well. The current economic crisis was caused by excessive debt, and the sooner we deleverage these debts the sooner our economy will get back on its feet.
If you are underwater in your mortgage and are behind on payments, we can help you end the stress, avoid foreclosure, and get a fresh start! We are affiliated with a network of proven short sale professionals that can help you negotiate with the bank and get out from under that burdensome mortgage and protect your credit in the process. Don’t go through foreclosure! Foreclosure can seriously damage your credit and make it difficult for you to purchase a house for up to 5 to 7 years.
Call us today, we can help!
-CH
Tags: Economy, Foreclosure, Sell a House, Short Sale
