Home Buying in 55076>Question Details

T, Home Buyer in Saint Paul, MN

why is it advantagious for a bank to let a short sale property go into foreclosure?

Asked by T, Saint Paul, MN Thu May 21, 2009

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Aaron Dickinson’s answer
The problem is hugely complex and impossible to answer completely but here are a few issues:

Many mortgages have mortgage insurance and the company that is insuring the mortgage wants to do everything it can to not pay out on claims.

Banks are so buried by these that they are too understaffed to handle the load.

The sellers sometimes don't have a good reason to ask for a short sale, which can make banks hesitant to negotiate.

Many of these mortgages were repackaged and sold on the stock market, which means 10-20 investors may need to sign off of the short sale to get approval.

Some agents do not know how to do short sales successfully.

There are more, but this is a large portion of the reasons.
Web Reference: http://www.AaronSOLD.com
1 vote Thank Flag Link Thu May 21, 2009
It usually is NOT advantagous, however they are so inundated with short sale packages, have horrible negotiators and company policies, that most short sales wind up in foreclosure. Good news is that the government will help streamline the process later this year!
0 votes Thank Flag Link Thu May 21, 2009

See what your options are instead of foreclosure. Here is a website that you can find a test in the upper right hand corner to see which government program you are eligible for.

Home Affordable Foreclosure Alternatives (HAFA)
•Is your mortgage currently unaffordable, or will it be in the near future?
•Even with adjusted payment plans?

Home Affordable Modification Program (HAMP)
•Are you struggling to make mortgage payments?
•Could lowered mortgage interest rates possibly make your mortgage affordable?

Home Affordable Refinance Program (HARP)
•Are you making your mortgage payments on time?
•Still trying to refinance your mortgage to a more affordable level?

Second Lien Modification Program (2MP)
•Has your first mortgage been modified under the Home Affordable Modification Program (HAMP)?
•Are you still struggling with payments due to a second lien?
0 votes Thank Flag Link Thu Apr 29, 2010
Aaron's answer is a good start; it also is not necessarily advantageous, but a result of circumstances and the willingness of the homeowner to attempt to work with lenders, banks and servicers. Most states have a process for foreclosure similar to MN and then some Federal laws also apply. Each situation has its unique qualities and the time-consumer nature of the processes and made more complicated by some of the problems Aaron notes.
0 votes Thank Flag Link Thu May 21, 2009
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