Behind on your mortgage payments and feel like there is no way out? This section will help you understand the difference between the Short Sale & Foreclosure.
Short Sale:
For this process to start, you must contact your mortgage company and
explain your situation. The bank will require you to prove a hardship has
occurred. A hardship maybe loss of job, death of person providing main
income, long term medical and others. The bank will determine if your
situation pertains.
Once you have talked with the bank and they have Ok’ed you to do a short
sale, you will find a real estate person you want to work with. To ensure
that everyone is working in your best interest, you must tell the agent of any &
ALL mortgages, liens & monies owned on the property. You will sign
the paperwork as if you are selling your home normally. Your home will
go on the market, and once an offer is received you will have to sign all the
documents. At this time your agent will submit the offer to the bank and the
short sale process will begin. You will not have any further input on what
happens with the sale. You will be required to attend the closing and sign all
the final paperwork to transfer title.
A short sale will affect your credit score 100-200 points, but you will have received a satisfaction of mortgage on your credit report. Most creditors will not look as harshly on this as they will a foreclosure. Some people have been able to purchase another home in 6 months to 2 years. Each situation is different and varying circumstances apply.
Debt Forgiveness Program: On Jan. 1, 2007 President Bush put into action the Debt Forgiveness Program. This program allows homeowners who had mortgage debt canceled in the timeframe of Jan. 1, 2007 – Dec. 31, 2009 not to have to pay taxes on the debt canceled. This only applies to homes that are in the homestead category and are the seller’s primary residence. Due to individual circumstances, you must contact a tax attorney to see if this program applies to you.
Foreclosure:
The foreclosure process is due to the homeowner becoming behind on their
Mortgage payments or a lien has been applied against the home due to
Work done to the property or a variety of other situations.
The Mortgage company will have to post an ad in the paper to notify the
public of the intent of the mortgage company to foreclose on the property.
This ad will have to run for 6 weeks in the local paper. Once the 6 weeks has
expired, the sheriff’s sale will happen. People will bid on the home and the
highest bidder will receive a sheriff’s certificate which they will file with the
county immediately to show their interest in the property & intentions. The
seller will have a redemption period, which is usually 6 months in order to
bring the mortgage current. If the mortgage is not brought current during
the redemption period, the sheriff’s certificate becomes document of final
transfer and owner must leave the property.
A foreclosure will affect your credit score immensely and will remain on your credit report not less than 7 years. You may be able to purchase another home in the future but could take up to 4 years to become eligible. Creditors to don’t look favorably on this
course of action. Each situation is different and varying circumstances apply. You should contact your accountant to see how this action will affect you.
Do not delay dealing with a foreclosure because your options may become more limited as time passes.
THE STATE DOES NOT GUARANTEE THE ADVICES OF THE AGENCIES LISTED ABOVE. ALL INFORMATION CONTAINED ON THIS PAGE IS SUBJECT TO CHANGE WITHOUT NOTIFICATION. AGENT & BROKERAGE NOT RESPONCIBLE FOR INCORRECT STATEMENTS MADE IN THIS SECTION. PERSONS ARE INFORMED TO CONTACT THEIR TAX ACCOUNANT OR OWN LEAGAL REPRESENTATION FOR EXACT DETAILS FOR THEIR SITUATION.
