One of the methods that homeowners use to save their homes from foreclosure that is quickly gaining in popularity among foreclosure victims and lenders is selling the property at a short sale. Although the option has been around for decades, the current environment in the real estate market has made the method particularly attractive, because it allows owners to sell for less than the total amount they owe on the loan. This is especially helpful now, as home values have been in decline and many loans were taken out at 90-100% loan-to-value.

Nearly five million households may be facing foreclosure in the next two years, which will contribute greatly to an overall decline in property values. These distressed properties must be sold for an amount to encourage a quick sale to stop foreclosure, but this may be impossible if what is owed on the mortgage exceeds any reasonable estimate of what the home could sell for. With the distinct possibility of a recession in the economy this year, even more layoffs and corporate bankruptcies will be announced, which will only contribute to the number of properties being sold.

For most homeowners, selling for less than what they owe may not be the most preferable solution to the foreclosure. It is, however, much better than going through the entire foreclosure process through the courts and sheriff sale, and can have positive impacts on the former owners' credit once the sale is completed. Instead of a full foreclosure showing on the credit history, the mortgage will be reflected as having been paid off and closed, but with a settlement accepted for less than the total amount. Obviously, this is not as good as paying off the mortgage in full, but it is far and away better than losing the home to a foreclosure auction.

Lenders are more willing to consider short sales when they are sure that the property will not sell for very much at auction, and the amount they are being offered for the short sale is more than they can expect from the sheriff sale. Foreclosure is an expensive process, usually costing in the range of $50,000 per case, but a short sale cuts the foreclosure off before the process has gone all the way through, thereby saving the lender some of its costs. It also has the luxury of working with the homeowners directly, rather than paying their local attorneys to file more paperwork in court or request the county government to enforce judgments.

Allowing the homeowners to sell at a short sale also saves the bank from having to take back control of the property if there is no other buyer at the auction. Banks are often the high bidder at county sheriff sales, even though they offer only the minimum required opening bid. Their goal is to get the property ready to be sold through a local real estate agent on the open market and regain some of their lost profits through the sale. If they can avoid that through the use of a reasonably-priced short sale, many of them will take that opportunity.

The main group of homeowners that should consider a short sale are ones that have little or no equity in their homes, and can not find a better way to stop foreclosure before they run out of time. Refinancing is often not a possibility when there is negative equity, and bankruptcy may come with a prohibitively expensive payment plan. If the bank is not willing to work out a repayment plan or mortgage modification because there is not enough income to qualify, then selling the home may be one of the only options left to the owners to escape the worst consequences of a foreclosure.

More info on your stop foreclosure information search:

Get Free Foreclosure Advice and Free Refinance Quotes
Get your free on-line foreclosure refinance quote and free advice from foreclosure mitigation specialist in minutes. Compare real offers from top national subprime and hard money lenders... more...

Washington State Provisions For Foreclosure
Washington conducts Judicial as well as Non-judicial foreclosure. What is the processing period for foreclosure in Washington? Normally, processing period is 120 days in Washington. What is sale publication period in Washington for foreclosure? Sale publication period is 90 days in Washington. Is ... more...

A Summary of Alabama State Foreclosure Law
Alabama State conducts Judicial as well as Non-judicial foreclosure, but Non-judicial foreclosure is more common. What is the processing period for foreclosure in Alabama? Normally it takes 50-74 days (approx 1.5 to 2 months) for processing. What is sale publication period in Alabama for ... more...

Vermont Foreclosure Laws
Vermont is a strict foreclosure state. That means that foreclosures in this state proceed on the premise that the lender owns the home, not the borrower. So, if the borrower transgresses on any condition in the mortgage before the loan is paid in total, they will lose all right to be in the home. ... more...

Summary Of Vermont State Foreclosure Law
There are four different type of foreclosure are followed in Vermont. Strict foreclosure Power of sale foreclosure Judicial foreclosure Non-Judicial foreclosure What is the processing period for foreclosure in Vermont? Processing period is normally 210 days (Approximately 7 months) in Vermont. Is ... more...