n many parts of the homeowner is at risk of
country, home prices defaulting on their loan, and the
doubled during the period lender agrees to sell the
from 2000 to 2005. During this property below the original
same time, creative financing appraisal price in order to avoid
programs (e.g. zero down payment, foreclosure. Most lenders do not
adjustable rate loans, interest readily agree to short sales,
only loans, option ARMs loans, although exceptional
negative amortization loans, circumstances such as a homeowner
etc.) gained popularity and losing his/her job or the death
helped some people buy homes who of a wage-earning spouse may make
would not normally qualify based some of them more open to doing
on their income, debt level and so.
credit history.
If a property is sold as a short
Most real estate markets are now sale, the lender recoups at least
cooling, and some are even a portion of the original loan
experiencing declining prices. In amount, the homeowner avoids the
times of dropping real estate stress and stigma of foreclosure,
prices, the amount owed on a loan and the new homebuyer gets a
by some homeowners may actually property below its original
exceed the value of a property. appraisal price. If a short sale
If homeowners cannot make their doesn’t work, then the property
monthly mortgage payment, there usually goes into foreclosure.
is a potential for default on the
loan and foreclosure of the Short sales may be an emerging
property by the lender. trend as the rate of foreclosure
is rising dramatically across the
The term “short sales” is used to nation. According to Business
describe a situation in which a 2.0 Magazine, the top 10
foreclosures markets are: lender may actually count as
taxable income by the IRS.
1. Greeley, CO
2. Detroit, MI In summary, a successful short
3. Miami, FL sale has some potential positive
4. Indianapolis, IN benefits (e.g., homeowners avoid
5. Fort Lauderdale, FL foreclosure, lenders recoup at
6. Denver, CO least a portion of the loan
7.Dayton, OH amount, new homebuyers gets a
8.Dallas, TX property at below the original
9.Fort Worth, TX appraisal price, etc), but there
10.Atlanta, GA are also many negative
consequences. Some of these
The credit of homeowners may be potential negative consequences
impacted after a short sale, but include: the negative impact on
it all depends on how the lender borrower’s credit, negative
reports the outcome. Some lenders impact on the value of other
report a partial loan repayment similar homes in the
as full payment of the debt due, neighborhood, and that the amount
which does not adversely impact forgiven by the lender may be
the credit of the borrowers. taxable event. Homeowners having
Other lenders report the sale as difficulty making their monthly
“settled,” which adversely and mortgage payment may benefit from
significantly impacts the talking to a real estate agent
borrower’s credit. The other who is experienced in short
problem is that the portion of sales.
the loan amount forgiven by the
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San Diego Condos
Pacific Beach Homes
Point Loma Homes
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