Are you behind on mortgage payments? A short sale may be the answer.
A short sale could be a lifeline for Ohio homeowners who are underwater on their mortgage. There are, however, some risks. An experienced foreclosure defense attorney can help you determine if a short sale is right for you. While it is a great way to resolve a foreclosure if you do not want to retain the property, it can be difficult because the lenders can take so long to approve an offer that many times the buyer will walk away in frustration. A foreclosure lawyer, however, can tell you if there are other options to achieve the same goal such as a consent judgment or deed in lieu.
What Is a Short Sale?
A short sale in real estate is when someone sells their home or other property for less than they owe on their mortgage. Property owners typically opt for a short sale to avoid foreclosure – while taking a financial loss on a home is disappointing, the consequences of a short sale are often less severe than the penalties of a foreclosure. If your home sells for less than what you owe, you could still be responsible for the remainder of the debt. This is called a deficiency. There may be options to eliminate a deficiency so the bank cannot come after you for any more money.
How Long Does A Short Sale Take?
Despite its name, a short sale generally takes quite a bit longer than a traditional sale. While every situation is different, a short sale can take several months.
What’s the Difference Between a Short Sale and a Foreclosure Sale?
A short sale is different from a foreclosure sale, and knowing the difference can help improve outcomes for distressed homeowners. A foreclosure sale is where a lender obtains a judgment against you in court and then forces the property to be sold in a public auction to recover the money owed on the defaulted loan. The biggest difference between the two is that a short sale is a voluntary action on the part of a homeowner, which gives the homeowner some control over the outcome. In a foreclosure sale, on the other hand, the lender seizes control of the property – the homeowner has very little control over what happens next.
Are Short Sales Common Today?
Foreclosures and short sales were more common during the Great Recession from December 2007 to June 2009. However, they became less common during the housing market boom. As the market cools and inflation rises, though, foreclosures are making a comeback – and short sales are likely to become more common too. In fact, the Q1 2023 U.S. Foreclosure Activity Report shows that foreclosure filings on U.S. properties during the first quarter of 2023 were up 22 percent from the previous year.
What to Expect During The Process
A short sale usually indicates that the homeowner is financially stressed and is facing foreclosure. You may consider it if you are three or more mortgage payments behind.
The mortgage lender must approve the short sale in advance. The lender receives all of the proceeds of a short sale; the homeowner will lose their down payment and any equity they may have in the property. After the sale, the lender can either forgive the remaining balance or pursue a deficiency judgment in which the previous owner must make up all or part of the difference. The lender usually agrees to forgive any debt left on the property.
Are there any Options to Keep the Home?
If you do not want to sell your home, there may be options you can explore to keep the home. An experience foreclosure defense firm can discuss these options with you.
Contact Cozmyk Law For More Information About Short Sales
For more information on short sales, or to find out if a short sale might prevent a foreclosure, contact the attorneys at Cozmyk Law. Our foreclosure defense attorney has substantial experience in Ohio foreclosure laws and can help you.