Has your dream of owning your own home in Tennessee turned into a nightmare? Are you behind on your mortgage payments or facing imminent foreclosure? If you are, arrange at once to speak with a who will explain your legal options and rights.
In 2022, approximately nine percent of the homeowners in the United States – about 4.5 million – are “underwater,” which means the value of their homes in the 2022 market is less than the amount owed on their mortgages.
If you’re underwater, and if you are behind on your mortgage payments, your options include a short sale and a foreclosure. With either of these choices, you will end up losing the home. The choice that is right for you will depend on your personal financial situation.
What is a short sale, and what can a do for you? If you’ll read this brief discussion of foreclosures and short sales, you will find answers to these questions, but if you are underwater and behind on mortgage payments, you need a lawyer’s personalized advice.
How Does a Short Sale Work?
A short sale happens when the owner of a property voluntarily sells that property for a figure that is substantially below what the property owner owes on his or her mortgage loan.
In a short sale, for instance, a property may sell for $300,000 even if the owner owes $400,000 on his or her mortgage. Additionally in a short sale, the lender receives all of the proceeds from the sale, and the property owner still must pay off any deficiency – $100,000 in this instance.
What is Required for a Short Sale?
Before a short sale property can go on the market, the mortgage lender must be presented with documentation that justifies the sale as a reasonable financial option, and that lender must approve the homeowner’s choice to proceed with a short sale.
Mortgage lenders don’t want to lose money in short sales. A lender may not agree to a short sale and may choose another option.
When lenders consent to short sales, potential purchasers must negotiate the transaction with the owner, and a purchaser then must seek the lender’s approval for the final purchase price.
How Does a Foreclosure Begin?
A foreclosure is initiated by the lender. It is the legal seizure of a property when a property owner falls too far behind on his or her mortgage payments. If you are a property owner, and especially if you are a homeowner, you do not want a foreclosure.
Federal law requires mortgage lenders to wait until a property owner has been delinquent on a mortgage loan for at least 120 days before initiating the foreclosure process. This gives property owners an opportunity to apply to lenders for loss mitigation or choose the short sale option.
What is Loss Mitigation?
For many Tennessee homeowners, loss mitigation may be their best option for dealing with a foreclosure. If you apply to your mortgage lender for loss mitigation within the 120 days before a foreclosure begins, the lender might postpone the start date of the foreclosure.
Loss mitigation is how mortgage lenders help property owners who are delinquent on mortgage payments. When you apply for loss mitigation, the terms of your home loan may be modified, you may be approved for a short sale, or the deed may be transferred back to the lender.
Could You Be Evicted?
When the foreclosure process starts, the legal control of the home is returned to the lender. If the homeowner and any occupants of the home have not departed from the property, the mortgage lender may have them evicted.
Short sales are a practical way for homeowners to respond to a foreclosure and escape an unfavorable financial situation. Homeowners lose their homes when they choose the short sale option, but they are relieved of mortgage debt.
Does a Short Sale Damage Your Credit Rating?
Given no other options, it is better to lose a home with a short sale than through a foreclosure. Short sales do not damage credit ratings, but a foreclosure may remain on your credit report for up to seven years.
After a short sale, you may still be qualified – if you meet several requirements – to buy another home, but if your mortgage lender initiates a foreclosure, you will not be eligible to buy another home for at least five years.
How Will a Tennessee Short Sales Attorney Help You?
If you are a homeowner in or near the Kingston area, and if you’ve missed a mortgage payment, or if you have been notified about a foreclosure, schedule a consultation with a Kingston short sales attorney as quickly as possible. You should have an attorney’s advice from the beginning.
Your attorney will thoroughly examine your financial situation and help you decide if the short sale option is the best option for you. If it’s not, your lawyer will explain your alternatives.
But if the short sale option is right for you, a Kingston short sales lawyer will help you obtain the consent of the lender and guide you through each step of the short sale process.
What Else Does a Tennessee Homeowner Need to Know?
You should also have a lawyer’s advice regarding the tax consequences of a short sale. The difference between the transaction amount and any outstanding balance on the mortgage will be considered taxable income by the Internal Revenue Service.
A Tennessee short sales lawyer will protect your legal rights and explain the effect of a short sale on your taxes and credit rating. If you have a better option, your attorney will help you find it.
A short sale property is usually sold “as is,” as neither the lender nor the owner have an incentive to invest more in the property. Short sale buyers expect bargains, so they usually take these properties “as is” and make few if any demands about repairs to the property before the closing.
What Should You Remember Regarding Short Sales?
A short sale helps you avoid a foreclosure and its negative consequences. It lets you settle your mortgage debt for less than you currently owe, and it does not damage your credit rating.
Should you miss a mortgage payment, or if you’ve been notified about a foreclosure, schedule a consultation with a short sales attorney at once. Your attorney will answer your questions, offer you sound and personalized legal advice, and guide you through the process of a short sale.