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The Lasting Impact of a Short Sale
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David Streitfeld wrote an excellent article in the New York Times last week about the lasting impact of a short sale on some families. While a short sale sometimes may be the only option for homeowners that need to sell their home yet owe more on the mortgage than they can get for it, lenders are not making this easy on anybody. Many are requiring homeowners to sign a document promising to pay all or part of the debt that is not paid off by the sale of their home. For some families, paying off this debt could take a lifetime of monthly payments.
According to this article, "Moody’s Economy.com estimates that about 10 million homeowners have negative equity, a condition known colloquially as being upside down or underwater. By next June, the forecasting company expects the total to rise to 12.7 million — a quarter of all homeowners who have mortgages."
Yet another scary scenario without an easy solution, since banks could be hit hard if everyone who is upside down in their home decided to try to do a short sale without making up the debt. But homeowners who cannot make their payments will simply end up in a foreclosure, which is equally painful for the homeowner, the bank and the neighborhood.
For a look at the entire article, go to http://www.nytimes.com/2008/09/19/business/19short.html?_r=1&scp=1&sq=David%20Streitfeld,%20short%20sales&st=cse&oref=slogin
Disclaimer: This column should not be taken as legal advice for your personal situation. Please consult an attorney, lender, Realtor or other real estate professional before making decisions.
