What happens first, foreclosure or short sale?
Question:
Answer:
That's somewhat correct. A short sale always happens before foreclosure, because it is a way to avoid foreclosure. It's a sale of the house to someone else for a price that is less than what is required to pay off the mortgage. The holder of the mortgage suffers a loss because there is not enough money in the deal to fully pay the mortgage. Short sales can only happen with the cooperation of the mortgage holder. They might agree to losing money this way in order to avoid losing even more money through foreclosure. Or maybe not. It all depends on the lender's opinion of what his best option is.
Foreclosure is definitely the last option. After the house is foreclosed the homeowner loses all rights to his property, so of course there is nothing to be done after the foreclosure is complete.
Short sale is what the owner will try to do if he/she owes more on the property than it is worth plus costs of sale. These are negotiated with the bank and , say, a buyer who offers to pay off a lessor amount on what is owed.
Foreclosure is the process that the trustee executes to take ownership of the home and liquidate the rights of the title holder.(Owner)
Banks will not arbitrarily short sale a home. They will foreclose on it.
They are totally different animals.
If your house is approaching foreclosure, you can take a qualified offer to your mortgage company. If they accept the offer you (and they ) avoid foreclosure. Also you could ask if they accept a deed-in-lieu of foreclosure where you just relinquish the house to them.
I specialize in short sales and foreclosures. As other people pointed out, they are two different things. Zygot is correct about what a short sale is and whether or not it gets accepted. Just to add to what zygot stated, if your state has a redemption period, you are still entitled to your home after it has been foreclosed on if you are able to pay back the lender.
Here are your 8 options in a foreclosure:
1. bring the loan current
2. work out a payment plan or refi the loan with the lender
3. deed in lieu of foreclosure - surrender the house back to the lender.
4. short sale or sell the home
5. legal delay - if your lender violated TILA or Regulation Z or improperly stated what is owed, you can sue the lender and delay the foreclosure and even make money.
6. File Bankruptcy
7. Redemption: Pay the loan off in full
8. Do nothing
Regards
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