Can
a home seller sell a home for less
than its mortgage?
A:
Yes,
in some case you can sell your home
for less than what you still owe on
the mortgage. But it is complicated
and depends on the lender. This situation
is known as a "short sale."
Sometimes a lender will be willing
to split the difference between the
sale price and loan amount, which
still must be paid.
A short sale may be more complicated
if the loan has been sold to the
secondary market because then the
lender will have to get permission
from Freddie Mac, the two major
secondary-market players.
If the loan was a low down payment
mortgage with private mortgage insurance,
then the lender also must involve
the mortgage insurance company that
insured the low-down loan.
Q:
When
does foreclosure begin?
A:
Lenders
will initiate foreclosure proceedings
when homeowners become delinquent
in their mortgage obligations, usually
after three payments are missed. The
lender will then notify the buyer
in writing that he or she is in default.
The lender can request a trustee's
sale or a judicial foreclosure, in
which the property is sold at public
auction.
A
borrower can cure the default by
paying the overdue amount and the
pending payment after the notice
of default is recorded, usually
no later than a few days before
the property's sale.
Some
sales allow the successful bidder
to take possession immediately.
If the former owner refuses to vacate
the premises, the court can issue
an unlawful detainer that allows
the sheriff to come out and evict
them.
Borrowers
should do everything they can to
avoid foreclosure, which is one
of the most damaging events that
can occur in an individual's credit
history.
Copyright
2006 Inman News Features
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