Although not as prevalent as they once were, short sales in Florida offer an alternative option to the foreclosure. With a short sale, the implications for the distressed homeowners are not nearly as severe. But there are a few things you need to know before discussing a short sale with your bank or lending institution.
What You Need to Know About The Foreclosure Short Sale In Florida
The foreclosure process begins when a property owner stops paying their mortgage. If they continue to be unable to pay their mortgage, then the bank or lending institution files a lawsuit against them seeking possession of their property. The end result of this process is that the homeowner ends up permanently losing their home. The bank then turns around and sells the property to the highest bidder. This transaction usually results in a loss to the bank.
What Are The Other Consequences of Foreclosure?
- The foreclosed homeowner’s credit is negatively affected for a period of seven years from the date they missed their first mortgage payment
- It makes it difficult, if not impossible. for the foreclosed homeowners to purchase a home during those seven years.
If you’re living in a house that is valued at less than the amount of your current mortgage, then the short sale, in most cases, offers a better option. In a short sale or deed in lieu of foreclosure, the property sells for less than the amount the owner owes to the bank on their mortgage. There is a lot of paperwork involved in the process. An updated appraisal of the property is also required.
When Does A Short Sale Become An Option?
A short sale becomes a viable option under the following circumstances:
- You are behind on your mortgage payments.
- You are experiencing hardship.
- There is documentation for the hardship.
- The hardship is the cause of the sale of the property.
- The homeowner can’t afford to pay the difference between the net proceeds on the sale and the amount of the outstanding mortgage.
What Are The Advantages of a Foreclosure Short Sale?
- You, as opposed to the bank, are in control of the sale.
- There is less damage to your credit report then if the property goes through the complete foreclosure process.
- You are not responsible for any more mortgage payments.
- A short sale as a general rule allows you to buy another home more quickly than if the property is foreclosed upon.
What Are The Drawbacks of a Foreclosure Short Sale?
- You have to find a buyer who is willing to purchase the property at market price.
- You have to obtain the approval from the bank or lending institution for the proposed sale.
- You have to convince the lender to release their lien on your property.
- It often takes a long period of time for the bank to respond to your request.
- The bank will require detailed personal information, such as income tax returns, bank statements, and a complete list of your assets and liabilities.
- The bank will request a hardship letter documenting the specific reason(s) for the hardship request.
Currently, there is no law preventing a bank from seeking a deficiency judgment following a short sale. It’s completely at the bank’s discretion. If you’re considering a short sale, you should retain the services of an experienced real estate attorney who can work with your lender to help facilitate the short sale process.
Foreclosure Short Sales in South Florida
To discuss this or any other legal questions regarding real estate or foreclosure issues, contact the law offices of Gary I. Handin today at (954) 796-9600, to schedule an appointment. We proudly serve Dade, Broward, and Palm Beach Counties.