Are you a Pacific NW homeowner at risk of foreclosure? Get informed about Short-Sales.

Short-Sale

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This past year has been incredibly challenging for many families, not only for Pacific Northwest homeowners, but for owners throughout the United States. I’m sure you’ve heard the term “Short-Sale” often in recent months, but you may not know the guidelines or implications. Let me walk you through some of the basics.

Short-Sales Defined

In short sales, the lender agrees to let homeowners facing financial difficulties sell their home for less than the mortgage owed on the home. For those facing potential foreclosure, this is often a better alternative, though it does have consequences both for the homeowner’s credit score and their taxes. After other efforts to keep homeowners in the home have been exhausted, this is often a last effort to avoid foreclosure on their Northwest home.

Short-Sale vs. Foreclosure

A short sale, though it does seriously ding the owner’s credit, is usually far less damaging to their score. The owner can qualify for a mortgage from Fannie Mae or Freddie Mac for another home within two years, which is far sooner than if the home had been foreclosed on. Short sales also help protect property values for the rest of the community by keeping the house from falling into disrepair.

Standardization for Short-Sales

With many families struggling during the after-effects of the economic downturn, there was a need for standardization in the process, and the US Treasury has now issued guidelines to streamline the process for homeowners. 75% of American mortgages are now governed by the new rules.

Under the US Treasury’s Foreclosure Alternatives Program, mortgage lenders have 10 business days to respond to a short-sale offer. Usually, a lack of timely response has been one of the reasons short-sales haven’t gone through. Paperwork and documentation are now also standardized, as are deadlines.

Benefits for Homeowners, Benefits for Lenders

Successful short-sales releases the borrower fully from their primary mortgage obligation, and the lender will not pursue a judgment against them. Homeowners can also qualify for $1,500 to offset moving expenses.

Lenders, on the other hand, are able to determine a minimum acceptable offer for the property under US Treasury guidelines. Though the lender still faces a loss on the loan, the loss is usually not as bad as if the property had gone into foreclosure. Through the program, mortgage servicers receive $1,000 for every short-sale they close.

I know it can be easy to feel completely overwhelmed if you’re behind on your payments and you know foreclosure may be looming —  but don’t let yourself become paralyzed.  Usually the worst thing you can do in this situation is nothing.

There is help available! I am a Certified Short-Sale Professional, and I’ve walked other Northwest homeowners through this challenging process. If you have any questions about what a short-sale on your Pacific Northwest home could mean for you and your family, please don’t hesitate to call me!

—Susan

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