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Understanding Short Sales

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Understanding Foreclosure's in New Albany

The word conjures up images of the 1930s and grainy black and white pictures. Yet it is a reality that many are facing right now in these tough economic times. There are many ways that home owners find themselves in this predicament including job loss, reduction in income, increase in mortgage payments, to name only a few.

Sadly, most of us know of someone, a friend, a relative, a business associate or perhaps ourselves who are facing the potential loss of their home. Many don't know there are other options besides letting their home end up in foreclosure. Some are even too embarrassed to investigate their options.

This is a shame and we would like to help explain some of the things you can do including a short sale or a loan modification. Both the short sale and loan modification options seek the same goal of avoiding a foreclosure, but with each providing a different outcome.

The short sale is for those that absolutely need to move and get out from under their debt completely. A loan modification is for those that would really like to remain in their homes but cannot do so without assistance.

It is important to remember that lenders are not in the business of owning Real Estate. They would much rather assist homeowners than go through a costly foreclosure to take ownership of their home.

Here is a break down of how both assistance programs work:

Short Sales in New Albany

A short sale is a lender approved solution designed to assist those home owners who are unable to pay mortgage debt. To be eligible for a short sale, the home owner must demonstrate to the lender(s):

1.) a financial hardship- this is an example of a hardship letter
2.) an inability to continue to pay- see the financial work sheet & owners document checklist

A short sale is negotiated through the mortgage holder(s) of an owner’s home where by the mortgage holder(s) agree(s) to take less than what home owner owes on the property.

An example of a short sale would be if a home owner owes $500,000 on their current mortgage and their home is only worth $450,000. The lender in this example would agree to take a short fall of $50,000 at closing. In many cases the mortgage holder may completely wipe out the debt and the home owner does not have to repay the 50k.

The home owner benefits in this situation because they get out of a sticky financial mess without going to foreclosure causing seriously credit damage. Most lenders will work with a short sale option to avoid a costly foreclosure.

Should a short sale be appropriate for your situation, make sure you choose to work with a reputable realtor who has good working knowledge of short sale procedures! A good Real Estate lawyer in your corner, who has worked with short sales, would also be an important consideration. There is a lot that goes into the process of completing a short sale. Having professionals to work with is vital when you are going through a short sale.

If you would like to investigate the short sale process we would welcome the opportunity to speak with you. We are well versed in the procedures and have been successfully completing short sale closings.

Loan Modification's in New Albany


Banks understand that sometimes a person’s problems are not permanent and can turn around quickly. Many lenders will offer the home owner some sort of loan modification to allow the homeowner some “breathing room” to manage a temporary set back.

The lender will want to know where the homeowner stands financially at the moment and what you can afford. Let the lender know your exact situation and your desire to remain in the home. Ask how you can work out a payment plan that will be mutually beneficial.

As with a short sale, the lender is going to want to know what caused you to become financially strapped and provide documentation to prove your case.

The bank has a number of ways, including forbearance an extension of the length of the mortgage, the interest rate, or a reduction in principal. It potentially could be some combination of all three. Remember the goal is to keep you in the home and the bank is working with you!

Above all else remember there is help available! We are happy to consult with you or anyone you know in this situation.

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