In my last blog WHAT THE HECK IS A SHORT SALE? I discussed in basic terms what a short sale is….it’s when the bank accepts a contract on your home and agrees to allow you to sell your home for less than what you owe on it. Every neighborhood, including mine, FishHawk Ranch has foreclosure homes for sale. Sometimes they will have a rider that says SHORT SALE or FORECLOSURE, but in most cases they don’t. I mean would you want your neighbors to know you have fallen on hard times and can’t make your mortgage payments? Most of us want to keep our dignity as we have to move from our homes, neighborhoods, schools, and friends. But, what happens once you have an offer that becomes a contract? It seems like all banks handle them a bit differently and some are more efficient than others.
Some would think, well, I have a contract and so everything will be fine. This is not always the case. When there is one mortgage on the property the process goes pretty smoothly. It’s when you have a first mortgage and a second mortgage sometimes called a HELOC (home equity line of credit) that things can become more challenging. My experience is that many people have two mortgages because during the height of the market, everyone’s home was worth more than what they paid and the banks were offering HELOC’s to just about everyone. What this causes when someone is short selling their home, is bank fighting with each other over who gets how much of what is recovered in the sale price of the home. The first mortgage holder of course wants it all and the second mortgage lender wants their fair share and so you have banks fighting with each other or perhaps a better word would be negotiating with each other for their fair share.
Well, while the negotiating is going the clock for foreclosure is also ticking or a better way to explain it is that while the short sale is in process, so is the foreclosure process and sometimes before the banks can come to terms or before the short sale actually closes, foreclosure kicks in and the bank removes you from your home and changes the locks on the doors and becomes the owner of record for the property. You would think that if a short sale is in process with an actual contract meaning there is a buyer for the home they would give an extension of time, but in some cases they don’t and now the homeowner is headed into foreclosure which is much more damaging to your credit, adds years to the length of time before you can re-enter the home buyer’s market, and the lender can still seek a financial judgment against you unless you file bankruptcy and include the home as part of the bankruptcy. And if you do that it normally costs about $5000 to file bankruptcy.
If there are any investors out there reading this or if you know anyone interested in buying foreclosed properties in the FishHawk Ranch community please click on the link FISHHAWK FORECLOSURES to see some really nice deals!
As always, if you have any questions please feel free to contact me. My contact info below.
REALTOR, Keller Williams Realty
CDPE – Short Sale Specialist
PCS Military Relocation Specialist
I don’t work from 9 to 5. I work from start to close!