Recently with the present economy we have had many people ask us about short sales. With this being a common concern for some of our clients we thought we should give you some information and answer a few questions about short sales and foreclosures how they affect you. A Short Sale may be the best method to use in order to avoid having a “foreclosure” on your credit report.
A “Short sale” is the process of working with your mortgage company where they agree to settle for less than what is owed to them. This is because the foreclosure process is expensive and time consuming for them. Each mortgage company has their own process as to how they handle each short sale and approval.
The mortgage company will need information from you that they will use in order to determine whether you qualify. (There are companies that can handle this for you which will eliminate the stress of dealing with the short sale yourself. )
This could affect your credit but it is far better than having a foreclosure on your credit records that will stay for seven years. It will be much easier to repair your credit without having a foreclosure on your record.
This process can take several months but will inevitably be good for both you and the mortgage company.
When there is a shortfall on the loan, the mortgage company may choose a deficiency judgment or they can choose to write off the balance of the loan. Then they may issue a 1099 form to the borrower in which he would be responsible for paying taxes on the shortfall (you may want to contact your accountant or CPA to discuss this).
We hope this helps you understand a little more about Short Sales and information concerning common mortgage terms that will be helpful with the process. If you have any further questions, please call our office at 843-492-441, we will be glad to help!
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