Questions About Short Sales & Foreclosures
While no one buys a home hoping to foreclose on the property or escape by the skin of their teeth with a short sale, for some, one of these options becomes a necessity. If you are upside-down in your mortgage, or simply can't manage to make your hefty payments any longer, explore these two mortgage-ending options and better prepare yourself to deal with whichever one may come your way.
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Are Foreclosures More Common in Some States?
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Homes in any state are subject to foreclosure, but some states do possess more foreclosures than others.
As Corbett B. Daly reported for Reuters (2011), half of all the foreclosures in the United States take place in just five of the country's 51 states and districts. The states that possess these elevated foreclosure rates are California, Florida, Arizona, Illinois and Michigan. Many attribute these high foreclosure rates to the rocky economic climates and job loss in these states.
How Can I Escape Foreclosure?
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Although there is no sure-fire way to prevent foreclosure other than finding a way to pay your mortgage, the government has made attempts to help home owners avoid foreclosure. The Treasury Department offered a hand-up to struggling homeowners in 2009 by creating the Home Affordable Foreclosure Alternatives Program (HAFA) which is intended to help homeowners by allowing them to temporarily lower their home mortgage payment obligations. This program is planned to run from April 5, 2010, to Dec. 31, 2012, but may be extended if foreclosure still remains a rampant problem.
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How Do I Get My Bank To Agree To a Short Sale?
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In a short sale, your bank agrees to take whatever they can get from the sale of your home, even if that amount is less than what you owe. To get your bank to agree to this foreclosure alternative, you must approach them properly. To do so, you should work with a trained real estate professional and compose a cover letter explaining why you need a short sale. Submit this to the bank along with your purchase contract and a balance sheet illustrating your income and expenses. Your bank may also request bank statements or tax returns before making their final decision regarding your request.
What Obligation Do Lenders Have To Accept A Short Sale Request?
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While many lenders, aware of the economic hardship some face, will accept a short sale request, they are under no obligation to do so. It is completely up to the discretion of your lender to decide whether they will accept a short sale in lieu of the full amount owed.
How Much Do Foreclosures and Short Sales Hurt Your Credit?
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Neither a short sale nor a foreclosure leave your credit completely unscathed. If you take either of these mortgage out options, you can expect your credit score to drop between 85 and 160 points, reported Les Christie for "CNN Money.com" (2010).
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