It’s a fact that 7 out of 10 distressed home sellers go into foreclosure without visible intervention to improve their situation. We speculate that sellers do not realize there is help available, and that doing something about their situation is better than just walking away.
Many sellers we talk to are embarrassed about their situation, while others are simply depressed and don’t wish to speak about it, hoping their financial situation will improve in time to change things. The sad reality is once a homeowner falls behind; it’s very difficult to ever catch back up, even if their job situation improves.
We’ve been reporting about the new government HAFA (Home Affordable Foreclosure Alternatives) program announced on April 5 designed to improve short sales. We’ve also told you that 2010 will be the year of the Transaction, either a short sale or foreclosure as loan modifications have not worked.
This past week we’ve met several large banks who have all committed to diligently approving short sales in a quick fashion. Many agents and buyers have been reluctant to offer on Short Sales because the truth was they were really Long Sales. This has changed and may now be a viable alternative for sellers and buyers alike. If your loan is with Bank of America, Wachovia, or Wells Fargo, it may now be possible to streamline your short sale. Other banks are following suit depending on who the end investor is on each loan.
We’ve provided a chart for sellers to illustrate the financial advantages of considering a short sale VS. foreclosure. Some of the details may affect you well into the future. You may wish to discuss this with your attorney as well, especially if you’re considering bankruptcy.
The good news is the short sale process has just improved dramatically, and while still very complicated, can provide relief for struggling homeowners and help them restore their credit so they can move on with their lives much sooner. This economy will improve one day, and it will be nice when current distressed homeowners can look back and not be held down by circumstances of the past. The short sale is one such tool to accomplish this.