During this time of economic uncertainty, foreclosure activity is up 57 percent nationwide. If you find yourself financially strapped, it may be necessary to do away with what you own and that includes property. Selling your home for less than what it is worth through a short sale is one way to avoid foreclosure. But will your entire mortgage debt be wiped clean after a short sale?
What is a Short Sale?
When your home is sold for a lower price than the amount remaining on the mortgage, it is considered a short sale. Many mortgage lenders will accept less than they are owed to avoid the paperwork involved in the foreclosure and then having to turn around and sell the home.
A short sale is a bit more complex than a typical house sale. Not only is the home sold for a lower amount than what you see on your mortgage loan, but the remaining amount of the loan needs to be considered in your decision because it may still be owed after the sale is completed. A short sale is one way to avoid foreclosure and possibly maintain your credit score, depending on the circumstances. However, some homeowners earn too much money or have too much value in their assets to qualify for a short sale.
Often the most complicated part of the process is having the lender authorize the sale. The homeowner will have to present a letter of hardship in which they explain why they could not make their mortgage payments on time and defaulted on the loan.
In a short sale, the deficiency is the remaining amount on the loan after a house is sold. In the state of Illinois, this balance could be forgiven by the lender or they could file for a deficiency judgment. A lender could collect the remaining balance by garnishing your wages or by placing liens on other property you may own. At Newland & Newland, LLP, we highly recommend including a request to have the remaining balance waived with your hardship letter. Keep in mind that the amount waived could be considered income for that year for tax purposes. That is why it is important to weigh all of your options before you make a final decision on what course you will take.
Contact a Grayslake, IL Short Sale Lawyer
If you are considering a short sale, you need an experienced Gurnee, IL short sale attorney who can help you through this complex process. Call 847-549-0000 for a free consultation. At Newland & Newland, LLP, we have many years handling residential and commercial short sales.