Delinquent Mortgage Payments
If you are a seller that finds you are unable to continue making mortgage payments, you should consider contacting your lender, explain your situation, such as losing your job and being insolvent, and request they allow you to list your home in the MLS as a Short Sale. This will inform the lender that they have two choices, the first is the Short Sale, which the lender could face discounting the loan by as much as 30% or to foreclose on the loan and face substantially more costs.Since the foreclosure can take place 150 days (5 months) from the date your payment became delinquent, it is important to contact the lender immediately upon realizing your situation to buy as much time as possible.
In a Short Sale, when the lender approves selling your home to a new buyer, they will relieve you of the total debt. There are important pitfalls I will get into when a buyer enters the picture.
A Short Sale is a much better way to go than foreclosure for the seller as there is nowhere near the damage to your credit that foreclosure causes. the seller receives a “Deed In Lieu of Foreclosure” that may put a ding on future credit, but a foreclosure damages credit for a long time.
