The basics on why foreclosure is NOT a valid choice for homeowners right now
There are many people who think that foreclosure is a valid option for distressed properties at this time.
IT IS NOT!
In fact, I had a mortgage lender in my presence today state that just walking away from your home if you are in a distressed position is the best thing to do.
I could have conked him over the head!!! I immediately corrected him.
Here's why:
1. Although states differ in their approach to mortgage loan deficiencies, in the state of California, we are an anti-deficiency state. Meaning, unless you have done something funky with the equity on the property (refi, etc.), then the deficiency on the sale of your property should not legally follow you. With a foreclosure, it most likely will!!
2. Even as we speak, there is tons of legislation being passed that are putting MANY programs into place to assist homeowners in holding on to their homes. And those programs are growing every day.
3. The negative impact from a foreclosure vs. short sale, or even vs. a deed-in-lieu of foreclosure is HUGELY more significant.
4. With the new HAFA short sale program, the homeowner can get up to $3000 in relocation money at the close of escrow. That will help TONS in logistically moving into temporary housing.
5. There are new loan regulations that are being developed that will help sellers who have sold their home in a short sale actually qualify for a home loan in a couple of years or possibly even less!!
6. Even as a LAST, LAST resort, you can go through a deed-in-lieu of foreclosure, where basically you're "handing in the keys" to the bank by signing over the grant deed to the home, as opposed to the mortgage holder having to seize the property through foreclosure by hiring a reconveyance company.
So with this information, DO NOT heed anyone's advice who is telling you it's a good choice.
(P.S. - don't steal my photos - I actually pay royalties through istockphoto.com for them so that the creative designer can earn a living too!)
