Short-Sales Vs. Foreclosures


To understand what a short-sale or a foreclosure is, and how they work, use the links to short-sale and foreclosure.

The table below shows you a few items you will need to consider when thinking of doing a short-sale, or you are thinking of letting the bank foreclosed on your property. As you can read from above, there are two major differences between a short-sale and a foreclosure for primary homes: - timeframe in which you can qualify to purchase a new home, and deficiency judgment agains you in the future. These are two important areas to consider and because it will affect you personally in different ways from other people, only you can make the decision on what's best for you (and your family).

  SHORT-SALE VS. FORECLOSURE
CREDIT SCORE 150-300 pts    200-300 pts
WHEN CAN I BUY NEXT HOME?  In 2-3 years   In 5 years
PRIMARY HOMES? Yes   Yes
INVESTMENT HOMES?  Yes   Yes
DEFICIENCY JUDGMENT?  Generally, no   Maybe

GOV PROGRAMS AVAILABLE?

HAFA   Available to avoid foreclosure

In today's market, there are also goverment programs available to try to keep you in your house. HOPE, HAFA, loan modifications, and other programs may be available to keep you in your home, or shortsale if you cannot longer afford the payments. HOPE program to keep the house. Click on this link to get more information about it.

Click on this link to learn how to avoid foreclosure. Also, call your bank and ask them for any programs they may have or how they can help you. Your bank is not interested on taking your home. Call and get help!

If you need any help with your home or your investment properties, call 85 & Sunny Real Estate at 321-254-1330 for a free consultation.


Short-sales Approval Letters


 

Please be advised we are not attorneys nor are we CPA. This is intended to inform our clients about potential risks. Clients should seek the advice of a qualified attorney or CPA for their specific situation.

 

Some banks are following the lead of Bank of America and are not waiving their right to pursue a deficiency judgment against the sellers of the property when approving a shortsale.  Normally, a bank has the right to go to court and obtain a deficiency judgment for up to 5 years against a seller that completes a short sale and does not satisfy the entire mortgage note.  This is true also for foreclosed properties.  Timeframes can vary from state to state and even if the lender has the right to pursue, many may not.

 

In the past many short-sales stipulated as part of the agreement that the bank would not pursue this judgment and would instead accept the reduce amount as payment in full.   Recently, Bank of America and Countrywide Mortgage (owned by BofA) have changed their policy and are informing clients that they are withholding their right to pursue these judgments in the future.

 

This does not mean that they WILL, just that they reserve the right to pursue. It still costs them money to pursue the seller and if a seller is selling because they have no money/assets and are unable to afford the property, it wouldn’t necessarily make sense for them to pursue when they have little to no chance of collecting. Still many would be short-sellers are now wondering what to do with this new change and how this will affect you.

 

If you are considering a short-sale you should understand that this change while inconvenient is not necessarily a deal breaker. Since the bank has the right to pursue a deficiency judgment in a foreclosure or a “turn-in” nothing has really changed. The only impact this has is whether you get the best deal possible for your property.  You should realize that typically a short-sale brings in more money than a foreclosure or auctioned property. Other costs you may want to consider are the homeowner's associations, property taxes, utility bills, lawn service, and other costs that may be added because of the maintenance of the house. The sooner you get the house out of your name, the sooner these are not your responsibility and they cannot longer continue being added to the deficiency.

 

Therefore, the size of the deficiency is typically LESS for a short-sale than a foreclosure / auctioned property. If the bank decides to pursue a deficiency judgment against you it’s possible that you would owe substantially less if you agree to the short-sale than if you let the bank take your property.

If the bank does pursue, it may be possible to declare bankruptcy or some other form of protection and have this reduced or eliminated in the future.

 

It is however important that you only consider a short-ale if your only other alternative is foreclosure.