Here's what I don't understand about short sales....
Based on what I have read, and my own interpretation gleaned from conversations with friends, clients and potential buyers...
- The great majority of the homeowner's involved in short sales do not want to leave their homes.
- Banks are overwhelmed by the paperwork both for the new loan for purchase and the documentation of the hardship for the old home.
- Foreclosures and other vacant properties blight neighborhoods
- Short sales and Foreclosures cause a HUGE hit to credit scores and preclude most buyers from purchasing another home for 3-10 years, extending this crisis for the forseeable future.
According to an article in the Baltimore Business Journal: Nationally, 3,825,637 foreclosure filings were reported on a record 2,871,891 U.S. properties in 2010 -- an increase of nearly 2 percent from 2009 and an increase of 23 percent from 2008. I would imagine that some portion of them attempted to sell their homes prior to foreclosure
Wouldn't it make more sense for lenders to offer the property to the current homeowner at the price they are willing to short sell it to avoid foreclosures. Banks would essentially write off the old loan or rather re-negotiate the old loan (I would use modify, but that has such an ugly connotation these days).
What's the benefit to keeping a borrower in their home?
- Bank-keeps the loan and a grateful borrower and their family in the home, potentially incenting the borrower to make on-time payments for years to come
- Lightens the paperwork load-1 borrower's documentation (current owner) instead of two (buyer and seller)
- Shortens the time to negotiate by using a pre-determined formula for value
- Fewer foreclosures and vacant homes
- Americans get back on their collective feet and begin digging out of this housing crisis!
Here's what I don't understand about short sales, wouldn't it make more sense financially and personally to keep homeowner's who want to stay in their homes IN their homes? Granted, this plan will not work for everyone or in all cases, but it sure seems that it might help!
Just my humble opinion!
Bridget McGee Maryland Mortgage Mama NMLS# 196068 SWBC Mortgage. 410-960-2061 EHO email@example.com or www.marylandmortgagemama.com
If you are considering purchasing a home in Maryland and want to be sure you are mortgage ready, my brother Tony and I will be happy to help! We help to make the mortgage process a pleasure!
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