How Short Sales Help Homeowners Avoid Foreclosure
Homeowners who are having trouble meeting the mortgage can avoid foreclosure and sell their houses through “short sales.”
(NAPSI)—For many families, the best financial move they’ve made in a long time is a short sale. That’s because for struggling homeowners, a short sale can help avoid foreclosure and prevent a big hit to their credit. So many people have discovered this valuable tool that short sales have become commonplace during the housing crisis, with the numbers reaching record levels in 2012.
A short sale is a real estate transaction in which a borrower’s mortgage lender agrees to a sale of the property for less than the balance due on the loan.
Lenders benefit from a short sale because it allows them to avoid the lengthy and more costly foreclosure process.
Homeowners benefit because they can stay in their home until it’s sold and credit damage is less severe, making a future home purchase easier.
Additionally, many of the nation’s mortgage lenders now offer their clients cash relocation assistance of up to $30,000 based on a percentage of the sales price.
The Mortgage Forgiveness Debt Relief Act allows homeowners who close a short sale to be free of income tax on the amount of their mortgage that is not paid off from the sale of their home. However, anyone considering a short sale should be aware that the Act is set to expire on December 31, 2013 and after that the amount of a mortgage that is not paid off becomes taxable income.
Short sales offer homeowners a number of benefits, but for many, the process can be challenging. “Short sales can be tricky transactions because of the paperwork and the negotiations that take place between seller and lender,” says RE/MAX CEO Margaret Kelly. “That’s why it’s critical to work with a real estate agent who is specifically trained to close short sales. And our RE/MAX agents lead the industry with this expertise.”
In response, most lenders have refined the short sale process, making the transaction even more attractive.
In addition, new policies at Fannie Mae and Freddie Mac will further streamline the short sale process and open it up to an even wider group of participants. Homeowners simply need to demonstrate a financial hardship and no longer have to be behind on their mortgage payments to qualify. Paperwork requirements have also been greatly reduced or, in some cases, eliminated.
Not only can buyers now get to the closing table more quickly, but struggling homeowners—who might otherwise wind up in foreclosure—benefit from a more responsive process.
RE/MAX has embraced short sale training with over 20,000 agents having earned the Certified Distressed Property Expert (CDPE) designation or the Short Sales and Foreclosure Resource (SFR) certification. You can find a short sale−trained agent at www.remax.com.