If you’re facing foreclosure, getting behind on your payments, or need to move but are “underwater” with your mortgage, help may be on the way. The new program is called: Home Affordable Foreclosure Alternatives
After the government’s abysmal failure to modify loan mortgages, they are finally giving some help to the win-win situation: a short sale
What is a Short Sale
A “short sale” is when the homeowner sells their house on the open market, but the bank agrees to a sale that is less than (“short” of) the mortgage balance owed.
The government’s new program will in some cases even help the homeowner transition to new housing with a $1,500 cash allowance. Why? Because they want to stem the tide of foreclosures, and a short sale is a decent alternative. Obviously keeping people in their home would be best, but it’s just not possible for millions of homeowners right now. The program will also give $1,000 to banks who participate in the program.
Short Sales Take Time
As someone who successfully went through a short sale, I will say this: it’s not an easy process. This new law should speed up the process a bit, but it still can take a very long time. I was lucky to work with a very experienced short sale real estate agent, and I would highly recommend you do the same if you’re thinking of going this route.
I’ve written quite a bit about short sales including:
- Foreclosure vs Short Sale – Who wins? Short sale for the win
- Avoiding Foreclosure With a Short Sale
- What happened when I got a Notice of Default posted at my home
- Find out what a deed in lieu vs a short sale
- Short sale credit issues
- taxes on a short sale
Short Sale Better in the Long Run
My take on a short sale is to think about it from a future lender’s point of view. Rather than just stopping all communication and “walking away”, you work with the bank to get an agreeable amount for your house, and you at least make the effort. It will hurt your credit score, but it won’t destroy it, and from a Banker’s point of view, it looks much better than a foreclosure.
It’s been about 1 1/2 years since I completed my short sale, and my credit score has returned to the 660 range.