Labor & Employment Law

Foreclosure vs. Short Sale

By Dobin & Jenks

Foreclosure vs. Short Sale

Since 2007, the amount of people threatened by foreclosure has risen dramatically. I don?t think anyone could imagine the magnitude of the housing market meltdown and its aftermath. I often get questions about Florida bankruptcy laws. Below is a question that was recently posted asking about foreclosure vs. short sale.

Question: I?ve been without employment for over a year and cannot meet my mortgage obligations. The bank has threatened with foreclosure on our home. At this point, what are the available options for us, or is there none? Additionally, could you explain what the differences are between a foreclosure vs. short sale?

These are two very good questions that I am sure many wonder about here in South Florida and across the nation. Let me address the second question before discussing the best options.

Differences - Foreclosure vs. Short Sale

A short sale is when a homeowner gets the opportunity to sell their home for less than what is owed. A homeowner must negotiate with the bank and must have them agreed to lower the payment amount. The trick is to not get stuck paying out a large sum of cash to get the short sale to close. The advantage of a short sale is that, in 2012, you have no tax consequences on any money that is forgiven by the bank.

A foreclosure, on the other hand, is when the bank forces the sale of a home, because the homeowner hasn?t paid the mortgage and note. In foreclosure, homes sell for much less than what is owed. The borrower is not off the hook, as the lender usually places a judgment against the borrower for money still owed.

As far as what your available options are, my suggestion is to try to prevent a foreclosure, as this is not a good option. If you or anyone is threatened with foreclosure, look for a qualified foreclosure attorney so you may receive the best legal advice regarding your financial situation.

Full post as published by The Law Planet Blog on April 09, 2012 (boomark / email).