Your home is your castle and you would do anything to protect it. Unfortunately, when times get tough financially, the real castle owners, your lender(s) may want their keys back. However, it’s unlikely they will ask politely. Instead, when the back decides to take action against a homeowner who has fallen severely behind on mortgage payments, it comes in the form of a foreclosure notice.
Without money in the bank and no foreseeable means to pay back your loan, you may think you have no choice but to walk away from your property. Wait! You do have a couple of opinions. Before giving in, contact a knowledgeable, savvy real estate lawyer who has helped countless clients save their homes from foreclosure in Cherry Hill, NJ and the surrounding towns in Camden County.
Joel R. Spivack, Esq. specializes in helping clients manage debt through bankruptcy but also via other alternatives to filing for bankruptcy protection. When it comes to foreclosure, Mr. Spivack believes there are two options that may be better for your pocket book, your credit score and your emotional health. Learn more about short sales and “deed in lieu of foreclosure.”
Short Sales: If you are behind on your payments, you may be able to sell your house for less than you owe the bank. Essentially, you are selling the house for an amount “short” of the outstanding loan. Of course, you need to get permission from your lender to do this. The benefit for the seller is that they don’t have to go through foreclosure but, instead, can sell the house to a new buyer. They won’t have a foreclosure or deficiency on their credit report. This doesn’t mean your credit report won’t take a hit, but it’s less of a hit for sure.
The benefit to the lender in a short sale is that they get “something” rather than the “nothing” they would get if they foreclose on the property.
Deed in Lieu of Foreclosure: In this process, the homeowner gives the deed to lender in exchange for forgiving the remainder of the loan. The bank agrees not to begin foreclosure proceedings and to stop any foreclosure action in the works. Additionally, the lender agrees to forgive any future deficiency (any amount of the loan that isn’t covered by a future sale).
The major benefit to the seller is that a deed in lieu of foreclosure looks better on a credit report than a short sale and certainly better than a foreclosure. Also, with this process, the seller may not have to actually deal with selling the house; they can just pack up and move and leave the details to the lender.
Both alternatives to foreclosure – short sale and deed in lieu – may be viable options for you if you are facing the prospect of losing your home. Contact Mr. Spivack for sound legal guidance about your personal situation. Since he is both a bankruptcy and real estate lawyer, Mr. Spivack is in an excellent position to advise you from both angles.