Selling Your Home - Short Sales
When does foreclosure begin?
Lenders will initiate foreclosure
proceedings when borrowers become delinquent in their mortgage
obligations, usually after three payments are missed. The lender will
then notify the borrower in writing that he or she is in default. The
lender can request a trustee's sale or a judicial foreclosure, in which
the property is sold at public auction. A borrower can cure the default
by paying the overdue amount and the pending payment after the notice of
default is recorded, usually no later than a few days before the
property's sale. Some sales allow the successful bidder to take
possession of the property immediately. If the former owner refuses to
vacate the premises, the court can issue an unlawful detainer that
allows the sheriff to come out and evict them. Borrowers should do
everything they can to avoid foreclosure, which is one of the most
damaging events that can occur in an individual's credit history.
How long do bankruptcies and foreclosures stay on a credit report?
Bankruptcies
and foreclosures can remain on a credit report for seven to ten years.
Some lenders will consider a borrower earlier if they have reestablished
good credit. The circumstances surrounding the bankruptcy can also
influence a lender's decision. For example, if you went through a
bankruptcy because your employer had financial difficulties, a lender
may be more sympathetic. If, however, you went through a bankruptcy
because you overextended personal credit lines and lived beyond your
means, the lender probably will be less inclined to be flexible.
Can a home seller sell a home for less than its mortgage?
Yes,
in some case you can sell your home for less than what you still owe on
the mortgage, but this is complicated and depends on the lender. This
situation is known as a "short sale." Sometimes a lender will be willing
to split the difference between the sale price and loan amount, which
must still be paid. A short sale may be more complicated if the loan has
been sold to the secondary market, because then the lender will have to
get permission from Freddie Mac, the two major secondary-market
players. If the loan was a low-down payment mortgage with private
mortgage insurance, then the lender also must involve the mortgage
insurance company that insured the low-down loan.
How does a home go into foreclosure?
Foreclosure
proceedings usually begin after a borrower has skipped three mortgage
payments. The lender will record a notice of default against the
property. Unless the debt is satisfied, the lender will foreclose on the
mortgage and proceed to set up a trustee sale.
How does someone sell a slow mover?
Even
in a down market, real estate experts say that price and condition are
the two most important factors in selling a home. If you are selling in a
slow market, your first step would be to lower your price. Also, go
through the house and see if there are cosmetic defects that you missed
and can be repaired. Secondly, you need to make sure that the home is
getting the exposure it deserves through open houses, broker open
houses, advertising, good signage, and listings on the local multiple
listing service (MLS) and on the Internet. Another option is to pull
your house off the market and wait for the market to improve. Finally,
if you who have no equity in the house, and are forced to sell because
of a divorce or financial considerations, you could discuss a short sale
or a deed-in-lieu-of-foreclosure with your lender. A short sale is when
the seller finds a buyer for a price that is below the mortgage amount
and negotiates the difference with the lender. In a
deed-in-lieu-of-foreclosure situation, the lender agrees to take the
house back without instituting foreclosure proceedings. The latter are
radical options. Your simplest, and in many cases most effective, option
is to lower the price.
