Real Estate Attorneys Helping Property Owners Avoid Foreclosure
Since the “Great Recession” – the period of the general economic downturn that began in the last couple of years of the 2000s and continued thereafter – everyone has seen an uptick in property values, right? Wrong! Many areas in Washington State continue to suffer from depressed real estate values, such that many homeowners are “underwater” when it comes to their mortgages. They literally owe more than their house is worth.
Depressed property values combined with any sort of personal financial crisis (e.g., an illness, loss of job, or a divorce) can be devastating. Unable to keep their expensive mortgage payments current, all too many Washington State homeowners face foreclosure. For some homeowners, there is a better alternative: The “short sale.” What is it and is it for you?
Short Sale Basics
In essence, a “short sale” refers to any scenario in which the bank or other lien holder allows the delinquent homeowner to sell the home for less than the current outstanding balance on the mortgage. From the lender’s standpoint, a short sale can often recoup most, although not all, of the debt owed it. The short sale also avoids having the property sit vacant. Studies show that vacant property deteriorates in value quickly; that’s something the lender desperately doesn’t want.
Important Points to Keep in Mind
The borrower should recognize that a short sale isn’t a magic wand. Keep in mind:
- The bank’s “short position” doesn’t go away. The borrower/original homeowner still is responsible for the difference between what the property brings in the short sale and the outstanding balance of the loan. Under some circumstances, the bank can seek a deficiency judgment for the balance owed.
- While the effect on the borrower’s credit rating is somewhat better in the case of a short sale than if there is a foreclosure, it is naive to think the short sale won’t take a toll on your credit score. Generally speaking, if you go through a short sale, you may qualify for a mortgage in three or four years. With a foreclosure, the time period is longer. In most cases, the foreclosure stays on your record for 10 years.
- While many real estate agents strongly recommend short sales over foreclosures, ask yourself one question: How does the agent make his or her living? Answer: By helping owners sell houses. The realtor isn’t necessarily being unscrupulous. He or she does have an economic stake in your decision. Do what is best for you, not the realtor.
- The bank may be “picky” about the short sale buyer. Remember, the bank does not have to agree to the short sale. If the new purchaser’s “deal” requires the lender to make a new loan, it may decline to do it.
Skilled, Experienced Legal Counsel is a Key to Short Sales and Real Estate Matters
Do you face foreclosure? Are you one or more months behind in paying your mortgage? Recognize that time is not your ally. No matter how hopeless the situation seems, you can often get out ahead of it. You likely need the assistance of a skilled, Washington State real estate attorney. For years now, the attorneys at Bolan Law Group. have assisted homeowners in refinancing mortgages and in negotiating and closing sales of real estate – even short sales. We have more than 30 years of combined experience providing both individuals and businesses with quality legal services throughout the Pacific Northwest. We pride ourselves on designing the simplest, most effective solution for your legal issue. For assistance with any sort of real estate issue, contact us on the web, or call our office at (253) 470-2356.