The length of time you live in a house, will probably not affect the bank's decision to foreclose.
Before you consider letting the house go into foreclosure, you may want to consider a short sale. This is often better for the bank and for you.
What is a 'Short Sale'? The â€œshortâ€ sale definition, which deals with the bankâ€™s willingness to release their lien or security interest in a home if it is being sold â€œshortâ€ or for less than the amount that the owner/borrower owes on the mortgage loan to the bank(s).
Behind the scene, the bank(s) (one or two) are negotiating with the owner/borrower for the owner to pay the difference or a portion of the difference between the sale price and the amount on the loan (the short amount). This negotiation is somewhat invisible to the prospective buyer, but is the main reason that the offer/purchase process can take so long (months).
The bank may eventually send the property into a foreclosure if the owner does not agree to sign a note to pay a portion of the â€œshortâ€ amount. The signing of a short sale note by the owner/borrower will not be secured by a mortgage lien associated with the home as it has been released when sold to the new buyer. The net effect of the note for the short amount lowers the amount the bank(s) will have to â€œwrite offâ€ or take a loss on for the amount the owner/borrower owes. Note, a foreclosure or short sale, does not prevent the bank from continuing to collect from the owner/borrower, especially if their financial situation improves after the home is foreclosed upon or sold.
The negotiation in the short sale process has several major goals:
1. Owner/borrower looks to sell home for less than is owed and have the bank(s) release their lien on the property
2. Owner/borrower looks to protect their credit rating somewhat in a short sale as opposed to a foreclosure
3. Owner/borrower asks the bank, based on their financial hardship, to write off the balance owed or write off a portion of the balance owed after the short sale proceeds are paid to the bank
4. Bank looks to prevent a foreclosure, expecting the home to get a higher price with the owner taking care of the property. Many foreclosure properties are abused by angry owners. Conversely, a short sale property tends to be in better condition.
5. Listing agent or hired negotiator for owner/borrower presents offers received to the bank(s) negotiators and works on an exit strategy where the bank will write off all, some or none of the difference between the selling short sale price and the amount that the owner owes on the property.
Banks are extremely backed up in the short sale negotiation area. Often they are in no rush to do anything. This allows the homeowner to continue living in the home while the lender is assigning the case internally to a loss mitigator.
For an excellent webinar on the entire short sale process see my website link: http://www.arizonahomesland.com/forsellersorlandlords.html
Note, I am not a CPA or financial counselor, see youâ€™re your accountant or lawyer if you ever have specific questions in the short sale or foreclosure area.
If you are unrepresented, let me know if you would like me to sell your home and bring in a short sale negotiator that is professionally trained to represent you to settle with your lender(s) in your best interest. Regards....Jeff
Jeff Masich, RealtorÂ®
Arizona Homes and Land
HomeSmart Real Estate
As Donald stated, consult an attorney for legal advice. There may also be tax consequences so consult a cpa as well. I know you may be short on cash, but you need to do this to protect yourself as best as you can.
Please contact me if you need contact info for attorneys and cpas that can help you. You may also visit my website where there is lots of good information for you.
The attorney will usually charge a retainer fee and answer all of your question.
Depending on your specific situation there are about 7 different options you have.
A good place to start would be the Arizona State Bar
Search for an attorney with foreclosure and short sale experience (real estate)
I hope this helps.
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