deed in lieu vs. short sale

thebenderclan · Joined: 02 Oct 2008 Posts: 2 1.46 Dollars($)

Thank you -

I live in FL. I must stop all payments due to medical plus loss of income.

Does a short sale protect you from forclosure - if you stop paying your montlhy mortgage?

Does the option of a short sale apply to vacant land?

What is the short sale credit benefit vs DIL in this scenerio.

I have communicated my hardship to the Bank -- What would you do?

elnoralittle · Posted: Thu Oct 02, 2008 8:24 am Post subject:

Unfortunatley a shortsale does not stop the bank from seizing the property. A short sale is worked out between you and the bank to sell the property for less than is owed. Some shortsales cover what is owed, some a little less, but the point of the short sale is to recoup the loan and unload the property as quickly as possible. But there are stipulations to the short sale and you should be aware of them immediately.

The following comes from wikipedia and is pretty explainatory: ( I hope it helps answer your questions.
A short sale occurs when the proceeds of a real estate sale fall short of the balance owed on the property.[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's Loss mitigation department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Most Short Sales leave a deficiency balance for which the Mortgagor / Borrower is still liable. In 99% of all cases it is not a settlement-in-full. A deficiency balance will remain while the mortgage broker, real estate agent / broker, loan officers, title and closing agents still remain getting their profit. And no regulatory agency governs this hybrid transaction.

Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market climate and the individual borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure. Often a bank will choose to allow a short sale if they believe that it will result in a smaller financial loss than foreclosing. For the home owner, the advantages include avoidance of having a foreclosure on their credit history and the partial control of the monetary deficiency. Additionally, a short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults.

gmakerley · Posted: Thu Oct 02, 2008 8:57 am Post subject:

based on what i just read, it makes me feel a little bit better about wikipedia's ability to have valid content.

thanks for sharing, elnora.

thebenderclan · Joined: 02 Oct 2008 Posts: 2 1.46 Dollars($)

Thank you for your fast response ! Have a Great Day!

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