Foreclosure Lenders
Short Sales to Avoid Foreclosure
Once a homeowner with a high mortgage balance relative to the home’s market value has gotten behind in his monthly payments, the lender must decide how to handle the borrower’s default. The lender can either pursue foreclosure, or can try to convince the homeowner to sell the home to pay off the remaining loan balance. If the owner is willing to cooperate and sell the property, lenders will often settle for an amount far less than the current balance owed on the mortgage loan. Lenders would rather give homeowners a shot at selling the property below market value before running a foreclosure auction. This is a process by which lenders mitigate or minimize their losses due to foreclosures.
It seems strange that lenders would approve a short sale, knowing that financial loss will result. Why is this so? Lenders use this strategy to avoid foreclosing on a property because an actual foreclosure is an extremely costly process. Not only must the lender repossess the home and resell it, but there are legal fees, insurance, taxes, real estate commissions, lost interest revenue and eviction costs as well. This is why negotiated short sales may often bring the lender a higher net amount than a home acquired through foreclosure and resold later. Lenders have taken so many REOs (repossessed houses) they are now facing enormous costs, time, and losses as these non- performing assets are sitting on their books. But the foreclosure costs aren’t the only thing that creates an enormous pressure on lenders. They also face major scrutiny from local municipalities to maintain their repossessed empty houses in good condition in order to keep drug related activities away, as well as reduce the vandalism. Some local government go as far as filing lawsuits against lenders who have a high number of REO properties in the area causing further expenses and losses. Under these circumstances a quick short sale settlement may look likeas a desirable alternative to foreclosure.
Many lenders slash prices deeply in an attempt to get rid of their crowded REO inventory, and lenders now realize just how much of a financial burden a large inventory of REO homes can be. Because of this, lenders are very motivated to avoid foreclosing on homes in the first place. Short sales have become so common that many lenders now have specialized staff on hand whose primary job is to handle short sale offers submitted on properties in foreclosure. Lenders are pulling out all the stops to avoid foreclosing on properties that add to their growing inventory of foreclosure homes with high ownership costs and associated expenses. Short sale has many advantages for home buyers, since it provides an opportunity to buy a home at a substantial price discount before the public foreclosure auction. Realize though that a short sale is always subject to lender approval. Real estate investors can take advantage of this option by “flipping” the home to sell it at a profit, or by using the bargain home as a rental for ongoing income.
About the Author
MORTGAGE FRAUD: LINDA GREEN EXPOSED 5-27-2011
|
|
Jiggaboo Jones Presents: Giving back the house! $12.95 Jiggaboo Jones is back at it again! This time he is teaching you how to “Give back the house” to your bank! Are you facing Foreclosure? Is your bank greedy and they do not want to help you? “Giving back the house” is an instructional video on how to prepare your home for Foreclosure. Learn the secrets that the banks do not want you to know! Exclusive interview footage with a bank representative wi… |
|
|
Mortgage Mess … |
|
|
Underwater Home: What Should You Do if You Owe More on Your Home than It’s Worth? $15.16 Underwater on your home? Don’t know what to do? Let one of the the nation’s leading experts guide you to the right decision. In Underwater Home, Professor White addresses all your concerns and helps you work through the emotions and practical realities of being underwater on your home. He explains your options and gives you the facts that will empower you to make the best decision for your famil… |
|
|
Winning Against Foreclosure: Lenders are using foreclosures to steal us blind. Uncover their game plan and learn how to win! $16.01 Thousands of homes are lost daily in foreclosure because borrowers and their attorneys do not have a plan to win! Borrowers, attorneys fighting foreclosure, and others that did not do their homework, research and investigation, or hire experts to do this for them are losing the fight against foreclosure. Even in the face of losing, you hear attorneys saying they “get it”, when they simply don’t u… |
|
|
Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis $7.93 An updated and revised look at the truth behind America’s housing and mortgage bubblesIn the summer of 2007, the subprime empire that Wall Street had built all came crashing down. On average, fifty lenders a month were going bust-and the people responsible for the crisis included not just unregulated loan brokers and con artists, but also investment bankers and home loan institutions traditionally… |
