Editors note: See the Bills.com resource Home Affordable Foreclosure Alternatives Program for an updated discussion of deeds in lieu of foreclosure and short sales.
You mentioned the properties are unoccupied, so I will assume that you do not qualify for the Home Affordable Mortgage Plan.
By definition, a short sale is where the mortgage holder agrees to accept less than the balance owed on the mortgage at sale to prevent foreclosure. However, Bills.com readers have reported that some lenders are holding former owners liable for the deficiency balance, so be sure to read the contract carefully.
What is a deficiency balance? When something is repossessed, the lender usually auctions the property (be it a car, boat, or real property) and applies the amount received at auction to the balance of the loan. The former owner is responsible for the balance of the loan less the amount received at auction, which can leave the former owner owing many thousands of dollars in a deficiency balance.
In almost all cases involving non-governmental debts, a creditor must file a lawsuit against the debtor and obtain a judgment before attaching a lien to the debtors property or garnishing the debtor's wages.
Short Sale Requirements
Contact the mortgage company to learn more about the process and if your father qualifies. Each lender has its own rules for approving a short sale or deed in lieu of foreclosure.
The typical requirements are:
- The residence must already be on the market for a certain number of days (90 days is typical)
- There can be no liens on the property
- The property cannot already be in foreclosure
- The offer of a deed in lieu must be voluntary
- The seller must have a hardship
- he house must be priced reasonably.
I hope this information helps you Find. Learn & Save.