I'm working with countless sellers right now who can no longer pay their mortgages due to illness, divorce, or due to other situations that are often beyond their control. Many people continue to ask me what short sales are and by definition they are a sale that occurs when the sale price is less than the amount owed on the property. In many instances the bank will allow the seller of a property to sell the property for less than the total owed in order for the bank (and the seller) to avoid foreclosure. Foreclosures cost the bank upwards of $50k (yes FIFTY thousand) in fees, property upkeep, taxes, maintenance and repairs, etc (not to mention the loss they take when they sell at foreclosure simply by way of the stigma of a 'foreclosed property') and banks don't want to own property so a short sale is often a very realistic option for both sellers and banks.
In cases where you'd ideally like to stay in your home, some banks will do a loan modification for you to reduce the total monthly payment. Unfortunately most people I know who have tried this have been unsuccessful. As of late, statistics are showing that for those who have been able to obtain a loan modification, nearly 60% still default on their payments at some point after the modification is in place.
Another option is to consider taking on a renter. In many cases that isn't feasible but if you'd like to stay in your home and would be able to handle your payments with the addition of rental income, it can be a good option. Always do a background check of course! Verification of past history is never more important when it comes to sharing your personal space with, what is oftentimes, a veritable stranger.
The final option should be a foreclosure action, there are just too many other and better options for people that should be considered before foreclosure. I hope the ones I've outlined here are helpful. My team can do everything from short selling, to loan modifications, property management and can sometimes provide even further options based on your specific situation.
For further information about short selling please see www.washortsaleassistance.com
