A Short Sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure, auction, or bankruptcy.
Yes, you read that correctly a lender may be willing to accept a lesser amount than owed. Most of the people who are facing foreclosure tend to be upside down on their property meaning that they owe more than the property is worth or cannot afford to sell their property and pay all costs associated with selling . This is where a short sale takes place. A homeowner is put in a situation where they cannot afford to sell their property and walk away without owing the lender money.
Why would a lender accept this?
*In Illinois the foreclosure process is a lengthy it could sometimes take up to 9 months, which can also be delayed if you have the proper representation
*The foreclosure process costs the lender money. While the actual foreclosure process itself may not be very costly(3-5K), the amount of time that the lender does not receive payments, takes the property over, then tries to resell it later all amount to very high costs.
*Lenders do not like excess inventory or foreclosures on their books, especially in this market. Don’t you think they have enough properties to sell?
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