This week an article on foreclosures and short sales came out that even I found shocking. Walking away from your home and allowing foreclosure may not be the end of your mortgage obligation.
The article went on to caution that selling your home via short sale does not automatically absolve you of the debt, either. This I did know, but realized upon reading the article I have never shared this important fact with my readers.
Short sales go something like this (although each one is very unique):
#1- you go into a default position with your mortgage by missing at least one full payment cycle.
#2- you list your home aggressively for fair market value with an agent that understands the short sale process
#3- you contact your lender and stay in communication regarding the status of the listing
#4- you hire an attorney who specializes in short sales
#5- you present offers to the lender for their approval
#6- the lender approves (you hope) the short sale and the house is sold
#7- IMPORTANT: Your attorney should get a signed release of financial obligation from the lender
#8- you move on to rebuild your credit
Step seven, if missed, can mean that the lender will come after you at a later date for the shortfall between what you owed and what the property was sold for. Be sure to discuss this issue with your attorney BEFORE the closing happens!
If you need help with a distressed situation like foreclosure or short sales, I am here to help with empathy and knowledge to give you a helping hand.
