As this story will tell you, it’s not all doom and gloom after a short sale on your Brooklyn home.
Finding an Licensed Real Estate professional with experience handling the short sale process can negotiate with your bank, give you a fresh start and in many cases, a new beginning without the burden of having a huge debt on your back.
About two years ago I assisted a seller who was in desperate financial need and I felt their situation would be perfectly suited to recommend a short sale for their home. They could no longer afford to live in the Brooklyn house they were in mid process of renovating due to an untimely illness. The housing market plummeted and the very high monthly payment on their first and second mortgage, placed this couple in a dire financial situation. They were trying their best to live normally, going about their daily routines avoiding the numerous daily phone calls, voice mail messages and piles of mail from the bank that was threatening foreclosure on their home. There were notices left on their front door, a stack of mail unopened and the duress they were feeling seemed never ending. By the time this lovely couple called me, they were both under so much stress they could barely explain their situation, without breaking down into tears.
We sat for a long time going over their finances and assessing the best appropriate action for them to take. They had been ignoring the problems, bills & harassing calls for so long, they felt their situation was hopeless. I then explained to them the differences between a short sale and a foreclosure on their home and how both could affect their future. If the bank should foreclose on their home , the mark it leaves on your credit score lasts for many years. Your credit score will not only plummet, but after the foreclosure sale the bank can still come after any of your assets for a deficiency judgment. A deficiency judgment is an unsecured money judgment against a borrower whose home’s resale or mortgage foreclosure sale did not produce sufficient funds to pay the underlying note or loan, in full. Even though we are all reading & watching the news reporting’s of people just walking away from their homes, it is not without a huge penalty that will catch up to them one day in the future that will affect their way of living one way or another.
A Short Sale on the other hand, allows for a negotiated sale price somewhere between the money owed on the note and the current market value of the property. Some lenders are even willing to allow a fixed amount of money set aside for the sellers to relocate. In many instances, a deficiency judgment can be avoided by proactively pursuing a short sale rather than allowing a home to go into foreclosure. One of the most important differences, according to Fannie Mae guidelines, a qualified borrower who completed a short sale is eligible for financing in just 24 months. By comparison, a foreclosure could be more than double that amount of time.
It has been two years since the short sale of this couples home. I am happy to report they are now qualified to purchase another home and I am actively searching to find them their new perfect place they can call home. Now that’s living happily ever after a short sale!