The Northern Colorado economy is outperforming the national average, but we cannot deny that many local homeowners have found themselves ‘underwater’ – owing more on their home than it can be sold for at today’s market value. This is occurring in all of our communities due to job loss, severe illness, divorce, mandatory job relocation, and mortgage payment increase.
Foreclosure causes financial and emotional devastation with effects that can linger for years. Some homeowners may ‘shut down’ once they are unable to make their mortgage payment, feeling that foreclosure is eminent. They do not realize that a ‘pro-active’ approach is the best approach and that there are options to foreclosure. Our job, as professional Realtors, is to help homeowners explore available options and possibly guide them through the process that can avoid foreclosure.
One option is a short sale which occurs when a negotiation is entered into with the homeowner’s mortgage company to accept less than the full balance of the loan at closing. A buyer closes on the property and the property is ‘sold short.’ In the past it was rare that a bank or lender would accept a short sale. However, due to market changes, lenders have become much more willing to negotiate when it comes to these transactions. There are government programs such as the Home Affordable Foreclosure Alternative (HAFA0 and the HUD Preforeclosure Sale Program available to qualified homeowners.
A short sale can salvage a homeowner’s credit history and may not have the tax repercussions that result from a foreclosure. For example, a foreclosure will remain as a public record on a person’s credit history for 10 years or more. A short sale is not reported on a person’s credit history.
If you, or someone you know, is experiencing a financial hardship and default is reasonably foreseeable, there may be options available to them. Contact The Group, Inc. for information Over 100 of our Realtors have been trained in the short sale process and we have transaction coordinators on our staff who specialize in short sales and will work with the bank to assist with the process.