Long Foreclosure Processes Help Only Some

With foreclosures taking longer than ever before to complete once a homeowner falls behind in their monthly payments, there are some people who inevitably benefit.

For a variety of reasons, foreclosures are no longer a quick process. Part of it is the fallout from that whole “robo-signing” debacle of 2010. But more of it has to do with lenders’ reluctance to foreclose on so many houses that the result is a glut of them on the market. That would push house values and prices even lower, and at this point in time, that wouldn’t benefit anyone.

We heard a news report the other day that in some states – not Texas, but the ones where the housing market is in the worst shape, such as Nevada, Arizona, California, and Florida – foreclosures are taking as long as two and a half years to complete.

Now, if you are a homeowner doing your best to keep up with your payments, even though you’ve gotten behind, the longer foreclosure process could be a godsend. Maybe you can land a job or a better job, and start making payments again and even get caught up. Unfortunately, it can also be a golden ticket for freeloading types, who – even though they might be able to make payments if they chose – would rather live in the house for free, spend their money on other things, and then just let the house go when the foreclosure process is complete.

No, it’s not fair, but that’s just the way it is.

But none of this matters if you’re one of those underwater homeowners who happens to need to sell your house now. Maybe you just found a job in Houston and need to move, or you’ve gone through a divorce and the house has to be sold to settle things. Foreclosure is less of an issue for you than the need to get everything in order.

In cases like this, you simply need to do a short sale, getting as much as you can for the house and working through your short sale agent with the lender to get the lender to accept the sale proceeds as payment in full, even though it’s less than the amount of your loan. That’s what we do, and it’s surprising how many of our clients are in situations like this, in which the sale of the house is something they have to do, rather than just something they want to do.

To their credit, our clients in these situations want to do the right thing. They don’t want to just head out of town to that new job or new life and leave an empty house behind for their lender to deal with. Doing the right thing has its rewards, too, since a successful short sale leaves a much smaller “ding” in the owner’s credit rating than a foreclosure ever does. They can move on with a clear conscience and the likelihood they’ll be clear to buy a new place if they want within a matter of months, rather than the years it takes for a foreclosure to be wiped off their credit history.

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