What is a Foreclosure vs. a Short Sale?
San Jose Bankruptcy Attorney comments on Foreclosure...
Most San Jose Bankruptcy Attorneys will agree: a short-sale is generally defined as a voluntary sale of a piece of real property for an amount lower than the amount currently owed on the mortgage. A foreclosure is technically an involuntary surrender of the real property to the bank/lender, although many consumers are voluntarily allowing their homes to be surrendered to the bank because they can no longer afford them. A short-sale requires the lender’s approval and can be difficult to negotiate because buyers are few and far between in this economy. The people receiving the greatest benefit from the short-sales are the brokers and agents facilitating the sale. However, one benefit of a short-sale versus a foreclosure is that consumers are generally able to get new mortgages from conventional lenders two years after a short-sale, but will have to wait five years after a foreclosure. Although, FHA loans are generally available to consumers who have had a foreclosure after 2 years also. Both the foreclosure and short-sale will negatively impact a consumer’s credit score, but the short-sale is generally not viewed quite as negatively as the foreclosure.
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