Property owners who owe more on their property than the property is worth may feel overwhelmed when trying to figure out their options. For many, the first step to take is to understand the many terms out there and what these terms mean. Arizona property owners may have heard the term short sale and may be wondering if a short sale can help them.
A short sale is an option some debtors have rather than foreclose on their property. A short sale is the sale of property in which the property is sold for less than what is still owed on the mortgage, and the lender agrees to forgive any shortfall between what is owed on the mortgage and the sales price. A short sale provides a huge financial benefit to the homeowner, both because the lender does not require full payment of the mortgage, and because the homeowner’s credit report will not reflect a foreclosure entry. There may be tax consequences for a short sale.
Lenders usually have very specific requirements for short sale agreements and will require timely and thorough short sale applications before they will approve the sale. They will want to know a borrower’s financial assets, including other property he or she may own, as well as bank accounts, debts and ongoing expenses, particularly any expenses that may be unusual, such as ongoing medical expenses. Lenders often impose specific time limits in which buyers and sellers must complete a short sale.
This post is for general informational purposes only. An attorney experienced in this area of the law may be able to help a homeowner determine if a short sale is the right option for him or her, and may guide the homeowner through the process of completing the short sale application. Attorneys familiar with short sales may be able to help clarify a lender’s requirements and answer questions during what may be an unfamiliar process and a stressful time for the homeowner.
Source: FindLaw, “Walking Away from a Home to Avoid Foreclosure,” accessed March 8, 2015