Loss Mitigation Blog

Basically, a short sale is when a bank or mortgage company is willing to settle the loan for less than the amount owed. They may do this for several reasons.

1. If you are unable to bring the account current, the bank may foreclose on the property. In a foreclosure, banks can lose much of the mortgage amount because of the extra costs involved with foreclosing on a property. These include attorney fees, court costs, lost interest, eviction costs, property maintenance costs, and selling costs.

2. Foreclosing on a property can also take a long time, making the cost increase even further. It is in the best interest of the lender to accept the short sale.

3. A short sale also can be in your best interest as the borrower. You will not have to endure the time and stress of a foreclosure. Your credit may not be as adversely affected as it would with a foreclosure. It is quicker and easier and does not subject you to the embarrassment of a foreclosure.

4. If you are going to pursue a short sale, please keep in mind that 80% percent of all homeowners fail when trying to negotiate with the bank. The foreclosure Aid Center has higher than a 90% success rate in negotiating with the banks.

5. In today’s current economic hardship. many banks are in such a grave situation that they are willing to take offers they would have never considered in better times. Because of this we are able to negotiate great terms for you whether you are considering a short sale or a loan modification.

A short sale can be a great way to get out from under an upside down mortgage, or just one you can no longer make the payments on. Your credit will still be damaged, however, it is far easier to clean up a short sale on your credit than a foreclosure.