Foreclosure can be devastating for your family, your finances, your credit score, and more. If you are facing a foreclosure action from your mortgage lender, you are likely looking for any way to avoid the foreclosure judgment and seizure of your home. Fortunately, there are ways to successfully defend against a foreclosure or come to an arrangement with your lender for an alternative to foreclosure. An experienced foreclosure defense attorney can identify which legal options are available for you in your foreclosure case.
One common alternative to foreclosure to which mortgage companies may agree is called a “short sale.” A short sale refers to the sale of your home and property for a lower amount than the balance on your mortgage. This is often helpful for homeowners who purchased the real estate during the housing “boom” and then watched as the value of their home plummeted to less than they owed on the house. This decrease in value makes it nearly impossible to sell the house and recoup the full mortgage balance, so a short sale can be an option to get out of an unreasonably high mortgage. If your lender accepts the short sale amount, the foreclosure action will be dropped. While a short sale can certainly be beneficial in many ways, there are also some drawbacks to consider before you agree to a short sale.
Short Sale On Your Credit Report
Many people believe that a short sale will prevent the long-lasting hit to their credit score that accompanies a foreclosure. Since a short sale occurs on their own terms and the mortgage loan is closed, many people think this option preserves their score and ability to obtain credit and a subsequent mortgage. However, a short sale can have a similarly devastating effect on your credit score as a foreclosure. In a short sale, you and your mortgage lender agree to settle the loan for less than the balance. Therefore, the credit bureaus read this as an account that you failed to pay as originally agreed, which can cause your score to drop significantly.
Your Dealings With Your Lender May Not Be Over
Certain mortgage lenders have been known to use promissory notes or short sale agreements that allow the lender to retain the right to attempt to collect the unpaid balance of the mortgage loan that was not recovered in the short sale. In the absence of a lien on your property, your lender can still seek a judgment from the courts for the balance of your loan, which can be significant. Before you sign any type of short sale agreement, you should have an experienced foreclosure defense lawyer review all agreements and paperwork for indications that your lender will try to continue to collect its money in other ways.
Discuss Your Short Sale Options With An Elgin Foreclosure Attorney
If you are facing a possible foreclosure in or around Elgin, South Elgin, Bartlett, Streamwood, Carpentersville, or St. Charles, Illinois, an experienced foreclosure defense attorney at the Jackson Abdalla Law Group can help you decide whether a short sale is possible or right for you. Please call 773-550-3853 for assistance today.