Foreclosure Vs Short Sale and What It Means to You | Irvine Real Estate | Irvine Homes and Condos for Sale

by Robert Mack on February 2, 2011

in Latest News, Sellers

Facing the prospect of foreclosure or short sale on your home is not easy. So many people are struggling with day to day expenses, job loss, health issues and, while it’s difficult, you may have to consider how to decrease your debt.

Here is a brief explanation of each process:

Foreclosure In most cases, a lender obtains a security interest from the borrower who pledges the real estate to secure the loan. When the borrower fails to comply with the terms of the mortgage, the lender has the right to foreclose. Foreclosure is the legal process by which a lender obtains a court ordered selling, or repossessing, of real estate. Furthermore, if the promissory note was made with a recourse clause, if the sale does not bring enough to pay the existing balance of principal and fees, the lender can file a claim for a deficiency judgment.

  • Typically, a borrower whose home goes into foreclosure will not qualify for an FHA home loan for 5 years.
  • On any future mortgage application, you must answer “yes” to the question “Have you had a property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”
  • Some borrowers credit will be impacted more than others for the same payment problem. Your credit score is likely to decrease anywhere between 100-300 points.
  • Employers often run credit checks on potential employees
  • Depending on the loan type, banks can go after more money from the homeowner if the sale price doesn’t cover the mortgage amount due which is known as a ‘deficiency judgment’.
  • A Foreclosure can show up on your credit history for 7-10 years.
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If you need help with your options, please call or email us anytime and we will gladly sit with you and help you create a plan of action!

Posted on Irvine Orange County Real Estate Market News

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Post by Robert Mack

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