About five years to one decade ago, score of people in Phoenix, Arizona decided that it was time for them to buy a home. These people were under the impression that their new home purchase would quickly appreciate in value. Much to their surprise, the exact opposite has happened with the crash of the housing market. The housing market has depreciated enormously. As a result, many of those same home owners are staring at something commonly referred to as an upside-down mortgage. An upside down mortgage means that the home owner owes a lot more money on their existing mortgage loan than the property is actually worth. Many people think that it really isn’t a good idea to continue to pay money on a mortgage such as this. So, they are faced with a couple of different options, bankruptcy or foreclosure?
There is another little known option in Phoenix, AZ that has proved to be successful for many people, the foreclosure short sale. Reallly, the term explains it well. With an foreclosure short sale, the owner of the house or property and the bank or mortgage lender reach an agreement on the repayment status of the home loan. Also, in a foreclosure short sale, the property owner refuses to continue paying the loan payments on a house that, in today's current real estate market, has now lost enough value to be worth only a fraction of that loan value. The property owner knows that he or she can sell the home on a down market, but with a foreclosure short sale he or she would be getting a smaller offer than what they paid for the house and would basically have to agree to take a loss on the foreclosure short sale.
The lending company, usually a bank, also realizes the difficult position that they are in. However, they will often give in to the fact that the current market conditions will make reselling a house in foreclosure a very difficult thing to do. So, with a foreclosure short sale, the bank will still have to take a loss, but the loss will not be nearly as much as if they have to foreclose on the home and sell it at auction. There is also a substantial savings with a foreclosure short sale because, with the alternative, foreclosure has many fees and legal hurdles to deal with.
So, the foreclosure short sale is a good solution for both parties. The bank, in a foreclosure short sale, has the ability to cut costs and reduce the size of the loss that they take. The home owner, using a foreclosure short sale, gets out of a upside mortgage as the bank accepts the lower offer as a payment in full on the mortgage and takes the loss. Foreclosure short sale is a win-win situation.
Do you have questions? Read the Short sale FAQs.
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