Foreclosure or Short Sale, You Actually Have a Choice — Shortsale Foreclosure
Whenever confronted with a bad situation it is imperative that you understand the alternatives available to you. Take for instance the possibility that you could lose your home through a foreclosure.
In a foreclosure, the lender takes control of your home and sells it at a trustee or sheriff’s sale. The price received is probably going to be less than what the homeowner owes, but this allows the lender to recoup some of his or her loss.
And, you don’t only lose your home, you lose your good credit because the lender will notify the credit organizations of the foreclosure and in some states there may be a court judgment against you for the deficiency which also appears on your credit record. And the situation can be worse if there are two mortgages on your home. Although the holder of the second mortgage gets nothing if the holder of the first mortgage forecloses, the second lender can still sue you for breach of contract or sell the loan to another institution for pennies on the dollar so that he or she gets something but you will then be open to harassment from the new owner of the loan.
You could attempt to avoid this situation by filing for bankruptcy but that opens up a whole new set of problems. If classified as a Chapter 13 bankruptcy you may be obligated to make partial payments over several years. If you get judged as a Chapter 7 bankruptcy, you may forego payments and other difficulties but your credit is still shot. And Chapter 7 is very, very difficult to get due to the new bankruptcy laws.
However you may be able to salvage the situation if you can convince the lender to go with a short sale instead of a foreclosure. A short sale means that you will have to sell your home on the market for the best price offered even if the price does not match the true value of the home or even equals the total amount of your loan with the lender. This allows the lender to get back at least some of his or her investment. The benefit to you is that you walk away from a bad situation with your credit still fairly good and with no law suits or hounding creditors coming across the horizon.
Which alternative would you rather confront?
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