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Answers (13)
- Rochelle Mezzano, "RochelleMezzano"
- Contributions:242
Hey, if you don't ask, you don't get. There are no consequences for trying to do a short-sale. Foreclosure is just the last resort. Nobody deserves what's happening, but dealing with it is the best for everyone, including the homeowner.
- Robert Range, "robertrange"
- Contributions:2
Generally, the consequences of a short sale are that your credit is going to get damaged and your Lender may be able to pursue you for the deficiency balance. Both of these are also consequences of foreclosure. The difference is that it is generally believed (based on current lending standards) that you'll be eligible to obtain home financing in about half the time with a short sale versus foreclosure on your record. It is also possible to obtain a short sale approval with the Lender waving their right to pursue the deficiency balance (not always). This is becoming much more common on 1st Lender approvals. I have not seen a 2nd do this yet - and I doubt they wll start to. The possibility of getting a release on the deficiency (even if only on the 1st) is pretty good reason to give the Short Sale route a shot in my book.
Robert Range
Prudential Sierra Nevada
[Link removed by moderator]
- Deborah Palmer, "DebPalmer"
- Contributions:1
[Deleted for self promotion]
- Michael Emery, "MikeEmery"
- Contributions:7286
You'll recover your value in a couple years -
Seriously? Maybe in Oregon....maybe.
You can try for a short sale but if you can't prove true hardship, the bank won't be willing to take the loss. Being 125 percent over value isn't considered hardship. And if you rent the house out and THEN try for a short sale, your chances are slim to none and slim just left on the afternoon train.
Shasta Steve makes an excellent point that if you foreclose, your lender could go after you with a deficiency judgment.
Asking real estate agents whether your should short sale is a little like asking a heroin dealer if you should shoot up - they have a vested interest in favoring a short sale over foreclosure. (hence the deleted for self promotion scarlet letter)
My advice? Get thee to an attorney to discuss your options.
Seriously? Maybe in Oregon....maybe.
You can try for a short sale but if you can't prove true hardship, the bank won't be willing to take the loss. Being 125 percent over value isn't considered hardship. And if you rent the house out and THEN try for a short sale, your chances are slim to none and slim just left on the afternoon train.
Shasta Steve makes an excellent point that if you foreclose, your lender could go after you with a deficiency judgment.
Asking real estate agents whether your should short sale is a little like asking a heroin dealer if you should shoot up - they have a vested interest in favoring a short sale over foreclosure. (hence the deleted for self promotion scarlet letter)
My advice? Get thee to an attorney to discuss your options.
- shasta_steve
- Contributions:448
Well as usual every agent gave pretty much useless advice. About the only comment I would agree with was lender Andrew's if it is at all possible.
Here is the deal for you. You are in a recourse state and that means the bank can pursue you for money if they foreclose. As Andrew pointed out if you can do a short sale and stay current, that would be about your best outcome but I feel it would be very unlikely. Unless you have a drastic change in income most banks are not going to allow a short sale if you are current on your mortgage and all of your other bills. If they do allow a short sale the will very likely want you to either bring money to the table or sign a note saying you owe them a certain amount of money because of the recourse nature of your loan
Now agents will always tell you how great a short sale is for your credit as opposed to a foreclosure and that is simply not true. Unless you are able to stay current on your mortgage the actual credit score drop between the two is almost the identical. The short sale will allow you to buy a home sooner depending on your credit. This could be better answered by a lender but I believe it is 2 years for a short sale and 7 for a conventional loan backed by Fannie or Freddie but no one really knows if they will still exitst in 7 years. The good thing is FHA is only 3 years if your credit has recovered. So basically if all things are equal you are looking at 2 years for a short sale and 3 for a foreclosure.
I let my house, which I had been using as a rental, go back a couple of months ago. I checked my credit two days ago. My credit went from a mid score in the mid 780's to a mid score of 704. My low score 688 and my high was 724. I had only been following my Transunion score and it actually went up about 20 ponts over the last month or so.
Here is the deal for you. You are in a recourse state and that means the bank can pursue you for money if they foreclose. As Andrew pointed out if you can do a short sale and stay current, that would be about your best outcome but I feel it would be very unlikely. Unless you have a drastic change in income most banks are not going to allow a short sale if you are current on your mortgage and all of your other bills. If they do allow a short sale the will very likely want you to either bring money to the table or sign a note saying you owe them a certain amount of money because of the recourse nature of your loan
Now agents will always tell you how great a short sale is for your credit as opposed to a foreclosure and that is simply not true. Unless you are able to stay current on your mortgage the actual credit score drop between the two is almost the identical. The short sale will allow you to buy a home sooner depending on your credit. This could be better answered by a lender but I believe it is 2 years for a short sale and 7 for a conventional loan backed by Fannie or Freddie but no one really knows if they will still exitst in 7 years. The good thing is FHA is only 3 years if your credit has recovered. So basically if all things are equal you are looking at 2 years for a short sale and 3 for a foreclosure.
I let my house, which I had been using as a rental, go back a couple of months ago. I checked my credit two days ago. My credit went from a mid score in the mid 780's to a mid score of 704. My low score 688 and my high was 724. I had only been following my Transunion score and it actually went up about 20 ponts over the last month or so.
- Doug Rogers, "Doug71360"
- Contributions:19
Do you need to move right now? If not, I would keep plugging away at the loan. The credit "ding" folks take for short sales verse foreclosure can be tough. I would contact a Real Estate Lawyer to find out exactly what this would be.
Then what? Would you rent a house until the market corrects? Would you really what to buy when the market heats up (and prices are rising). If in your shoes, I would sit tight for a while. Best wishes!
Then what? Would you rent a house until the market corrects? Would you really what to buy when the market heats up (and prices are rising). If in your shoes, I would sit tight for a while. Best wishes!
- Andrew Adams, "203K Specialist"
- Contributions:9349
Stay current and do a short sale. If you have a real hardship staying current will allow you at least the opportunity to obtain a new loan much earlier than if you fall behind and short sale or foreclose.
- Mike Shirley
- Contributions:30
Don't do it! You'll recover your value in a couple years, long before your credit report recovers. You'll loose more value when you pay commisions on the sale, you could end up owing taxes on the amount the bank forgives and even if you can qualify to buy a home in 3 to 4 years the rate will be higher because of your damaged credit.
It's painful now but you'll be better off sticking it out in the long run. If you can't make all of your payments, look at you credit card and consumer debt first.
- Kyle Krch, "jamieson79"
- Contributions:655
[Deleted for self promotion]
- John Paunan, "John Paunan"
- Contributions:1145
Deeds in lieu of foreclosure and short-sales will also allow you to qualify for a new mortgage much sooner than if you were actually foreclosed upon. You want to avoid a foreclosure if at all possible.
- Amanda D. Echolds, "Amanda D. Echolds"
- Contributions:8
Hi Chela49,
You are not alone in this, there are so many people in your same shoes asking the same question. I agree with Don, doing a short sale is the better option, especially because you mentioned that your credit is good and you are current on your payments.
By doing a short sale you may immediately qualify to buy another home or wait 2-3 years depending on the loan. With a foreclosure you would most likely be forced to wait 5-7 years before you can qualify to buy another home.
Also, the effect on your credit will be more severe by doing a foreclosure rather than a short sale. They both will stay on your credit report for around seven years but because you have good credit and haven't defaulted on your payments your credit will not be affected as harshly.
Doing a short sale is your best option, you will be in control of the sale and will be able to move past this hardship.
Good Luck to you!!
Amanda
You are not alone in this, there are so many people in your same shoes asking the same question. I agree with Don, doing a short sale is the better option, especially because you mentioned that your credit is good and you are current on your payments.
By doing a short sale you may immediately qualify to buy another home or wait 2-3 years depending on the loan. With a foreclosure you would most likely be forced to wait 5-7 years before you can qualify to buy another home.
Also, the effect on your credit will be more severe by doing a foreclosure rather than a short sale. They both will stay on your credit report for around seven years but because you have good credit and haven't defaulted on your payments your credit will not be affected as harshly.
Doing a short sale is your best option, you will be in control of the sale and will be able to move past this hardship.
Good Luck to you!!
Amanda
- ConnieK_Oklahoma
- Contributions:2896
try for a short sale. and that means really try, show it just like you would if you were trying ot make a profit- keep it clean and ready to go.- contact a local agent that will market it and work it. Looks like you already have a local response. they can give you more specific advice after getting all the details.
- Don Brown, GRI, "donbrownshome"
- Contributions:4
[Deleted for self promotion]
Try for a short-sale or just walk?
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