Monday, July 14, 2008

South Jersey Short Sales

There are some advantages to having a short sale over foreclosure. Sure the lenders still lose money - but not nearly as much as they do in foreclosure. The seller may have a slight blemish to their credit but nothing like what a foreclosure will do. The property does not sit vacant like a foreclosure does. There are still negatives aspects - the sellers walk away with nothing (but at least no check to closing!) and the bank still loses money on the loan. But usually the choice is between a short sale and foreclosure - and a short sale should always the preferred choice.

Which brings us to an article in the Atlantic City Press titled Short sales saving more locals from foreclosure. That sounds great! Unfortunately the article does not really any numbers on how many people are actually completing a short sale. Most of the article touts the benefits of a short sale. There is only one example, and that is for a second home. Let's take a look -

As an example, [attorney Jeffrey P. Barnes, of Stefankiewicz and Barnes in North Wildwood] told of a Pennsylvania couple who bought a second home in the Wildwoods. As a result of falling real estate values, they wound up owing $50,000 more for the condo than it was worth.

The couple had hoped to rent it out but couldn't at a price that would cover their mortgage costs, he said. And they had taken out a home equity loan for the down payment on the second home and now couldn't keep up with all the payments.

"They got quite emotional about it. They had always paid their bills, and they didn't know what to do. They tried whatever they could to keep it going," Barnes said.

When their savings were depleted, they looked for a solution and pursued a short sale. Their bank allowed it and in a couple of months, they got out of the second home, he said.

This is the best example they could come up with? A couple with a failed investment property. There must be better short sales examples. How close was this couple to foreclosure? Could they have rented it out at a slight loss and kept the property? There seems to be a lot more information on the couples state of mind than the state of their finances. Too bad. And the headline sounded so promising.

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