Choosing between a Short Sale & a Voluntary Foreclosure
Foreclosure is what happens when a homeowner fails to make their mortgage payments. In the first six months of 2018, it’s estimated that 1 out of every 370 housing units in the United States had a foreclosure filing. According to Daren Blomquist, the Senior Vice President of ATTOM Data Solutions, these numbers are the consequence of loosening lending standards. Some debtors try to avoid foreclosure by negotiating a repayment plan or loan modification with their lenders. However, if these options aren’t available to you, then you may need to arrange a short sale or a deed in lieu of foreclosure.
As the term implies, a short sale is when a home is sold at a price that is “short” of the amount required to pay off the mortgage. After the sale, a lender may seek a personal judgment against the homeowner to recover the deficiency amount. To get approval for a short sale, the homeowner must first contact their lender and request a loss mitigation application.
A completed loss mitigation application includes:
- A financial statement
- Proof of income
- Two recent bank statements
- Most recent tax returns
- A hardship affidavit
- Offer from a potential purchaser
Before a homeowner can sell their property to a third-party entity, the lender’s loss mitigation department needs to review and approve of the short sale. This process can become complicated if there are multiple mortgages on the property. In this scenario, both mortgage holders must agree to the short sale. If you’re facing this situation, it’s imperative that you contact an experienced mortgage refinancing attorney today.
You can also avoid foreclosure by completing a voluntary foreclosure. This legal transaction, allows a homeowner to deed their property back to the lender. Ideally, this cancels the foreclosure and frees the homeowner from any remaining mortgage obligations. Like a short sale, a debtor needs to submit a loss mitigation application in order to obtain a deed in lieu of foreclosure.
If your application is approved, the lender will send the following documents for you to sign:
- A deed that transfers ownership to the lender
Before submitting your application, it’s in your best interest to review your situation with a seasoned legal representative. At Chesser & Barr, P.A., we can guide you through this nuanced legal process and attempt to negotiate a deed in lieu of foreclosure agreement that includes a waiver that prevents the lender from recovering the remaining deficiency.
Schedule a Consultation Today
When your credit is on the line, look to Chesser & Barr, P.A to help you navigate the foreclosure process. Our Okaloosa County mortgage refinancing lawyers can review your financial situation and help you complete the necessary applications and closing paperwork. If necessary, our skilled litigators can also represent your interests in court, particularly if you’re dealing with multiple mortgage holders.
Contact Chesser & Barr, P.A. at (850) 610-7471 to schedule a consultation.