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Why Avoid Foreclosure?

by elizabetheugenio on February 28, 2009

A short sale is when a homeowner owes more than what the house can sell for.  If a homeowner has a loan of $450,000 and the value of the home is now only $380,000, the lender on a short sale will pay for the deficiency of $70,000 plus the cost of selling the home.  Why will the lenders take this loss?  Because they do not want to take back the property in  foreclosure.  Lenders pay an additional $50,000 to $60,000 for every home that goes to foreclosure after they pay for their holding cost, attorney’s fees, get the home cleaned out and maintained, change the locks and keep the home in their inventory longer before the home sells as an REO (Real Estate Owned).  In some cases, there may be 2 or more loans against the property. When a property goes to foreclosure, it creates a 9% decline in property values in the neighborhood.  If we can all be more proactive in informing our friends that they have better options than foreclosure, we would be helping the economy.

A  homeowner who loses a home to foreclosure becomes ineligible to get a Fannie Mae backed loan for a period of 5 years, whereas a homeowner who choses to do a short sale will be eligible only after 2 years.  Now that Fannie Mae and Fredie Mac loans make up for a big percentage of loans being written, it is best to avoid that negative consequence.

Additionally, when employers do credit check on applicants or current employees, a foreclosure can have a very detrimental effect on the employee and in some cases, when employees hold  sensitive position could be a ground for reassignment or termination.  A short sale is not reported on a credit history and therefore is not a challenge to employment.  “The loan is typically reported as “paid in full, settled”.

Ask me about short sales if you want more information.

Elizabeth M. Eugenio, (909) 376-8615

Email:  Elizabeth@HomesByLiz.com, Website: www.HomesByLiz.com

Certified Distressed Property Expert (CDPE),  Certified Residential Specialist (CRS), Graduate Realtor Institute (GRI).

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Article by Elizabeth Eugenio

Since 1991, I have served the residents of Chino Hills and surrounding cities. Providing exceptional customer service has been my top priority earning me referral and repeat business from family, friends, associates and past clients. The advanced training in finance, marketing and technology I received as a Certified Residential Specialist (CRS) designee provides you better representation making the buying and selling process a more profitable and easier experience. Only 4 % of Realtors in the nation has earned this designation. Short Sale and Foreclosure Resource (SFR) is the only designation recognized by the National Association of Realtor for short sale and foreclosures. This designation and the (CDPE) Certified Distressed Property Expert has allows me to better assist you as a buyer on your purchase of these properties and as a homeowner experiencing financial hardship avoid foreclosure. Additionally, the Seniors Real Estate Specialist (SRES) designation has helped me serve the special needs of the 55 years and better population by making the process easier and help keep more of your r money when you move. Contact me for all your real estate needs and you can count on me to provide you better representation and make sure you have an easier and smoother transaction. I can be reached at (909) 376-8615 or at: Elizabeth@HomesByLiz.info.

Elizabeth has written 27 articles on this blog.

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