Short Sale
A Short Sale is used as an alternative to foreclosure in specific scenarios. It mitigates additional fees and costs to both the creditor and borrower. Either often result in a negative credit report against the property owner. A foreclosure appears on a credit report for 7 to 10 years, but a short sale allows you to be considered for a loan by a lender in as little as 3 to 4 years.
More specifically, a short sale is a property sale from which the proceeds will fall short of the of debts owed on the property that have been accrued by liens against the property. Also, the property owner cannot afford to repay the liens’ full. In this even the lien holders can agree to release their lien on the property and accept less than the amount owed. Any unpaid balance owed to the creditors is commonly referred to as a deficiency. Short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans, unless specifically agreed to between the parties. However, California law precludes deficiencies after a short sale is approved. Meaning, the home owner is not under obligation to repay the amount of the deficiency to the lean holders. This legislation is reviewed yearly and can change.
-Edie Downs