Short Sales on the Rise?
From the NYTimes.com: “Increasingly, financially strapped homeowners who owe more than their homes are worth are trying a so-called ”short sale’‘ as an alternative to foreclosure. In a short sale the lender agrees to accept less than the homeowner owes on a mortgage.
Before 1990, short sales were rare. Last year, the National Association of Realtors estimates there were 500,000 short sales, about 10 percent of all sales. . . .
A short sale can hurt a borrower’s credit score as badly as a foreclosure, but won’t last as long. The blemish from a short sale depends, in part, on how the lender reports the sale to the credit rating agencies, Experian, Equifax and TransUnion. Occasionally, a lender will agree to report the loan as ”paid,” which according to Experian would not negatively impact credit scores. However, the agency also notes, that doesn’t happen often. . . .
The good news is that after a short sale, a borrower’s credit score starts to improve within the first 24 months. One benefit of a short sale is that consumers usually can buy another home in two to three years, rather than five to seven as is the case with a foreclosure.”
There are a lot of factors that go into completing a short sale. This is certainly one of those factors that as an investor trying to get a short sale deal done, you must be aware of and be able to deal with.
What have you seen while you have been setting up your short sale deals?
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