Lenders increasingly flexible to avoid foreclosure

April 20, 8:21 PMNorthern Virginia Real Estate ExaminerBrett Widness

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Saw this article in the Fredricksburg newspaper about lenders agreeing to short sales to avoid foreclosure.

This is only logical: it's a lose-lose situation for the bank to take posession of the home.

If a seller puts their home on the market, and doesn't get any offers that will cover their existing loan, the banks would be wise to write down the value of the loan, sell the home to the highest bidder, and be done with it.

While the seller isn't going to get any equity out of the deal, at least they are free and clear of the home, and their credit isn't ruined by a pointless foreclosure.

At the same time, owners who find themselves "upside down" on their loans, should talk to their lenders before they stop making payments and voluntarily go into foreclosure.

"Short sales are one of the tools to avoid foreclosure if all other workout options are exhausted," said Amy Bonitatibus, Fannie Mae spokeswoman. "It's always in the best interest of the home buyer, the community and the investor to avoid foreclosure."

Foreclosures drop in the D.C. area