No matter how careful you are about managing your money, unexpected financial difficulties can arise that may cause you to be unable to pay your bills and cover your ongoing expenses. Currently, many people throughout the United States are struggling with financial issues due to the COVID-19 pandemic. Those who have lost their jobs or who have faced additional expenses related to an illness may have trouble making mortgage payments, and defaulting on a mortgage may lead a lender to begin foreclosure proceedings. While the federal government has placed a moratorium on foreclosures for the time being, if you are unable to become current on your mortgage payments by the end of this moratorium, you may face the loss of your home. If you are unable to prevent foreclosure, you may be able to complete a short sale that will allow you to avoid owing additional money to your mortgage lender.

What Is a Short Sale?

In a short sale, you will sell your home for less than the total amount that is owed on your mortgage. This can be a good option if your home is “underwater,” meaning that you owe more money on the mortgage than the home is actually worth. Typically, your mortgage lender will need to approve a short sale, and they may do so if you can show that it will be more financially beneficial for them to allow this type of sale rather than pursuing foreclosure proceedings. 

Foreclosure is usually the last resort for lenders, and they may lose money during the process of seizing a home, placing it up for auction, and transferring ownership to a new buyer. A short sale may also cause a lender to lose money, but it can reduce complications by ensuring that a new buyer will be found, and in many cases, the lender will receive a larger amount of what is owed. 

By working with your lender to arrange a short sale, you may be able to avoid a deficiency judgment. Following the sale of a home during a foreclosure, a lender may attempt to recover any additional amount owed on a mortgage, including by pursuing a civil lawsuit against the borrower. When receiving approval for a short sale, you may be able to receive forgiveness for any deficiency, avoiding the need to pay additional money to the lender. 

A short sale may help you avoid some of the financial difficulties of foreclosure, and it can provide other advantages, including the ability to receive financial assistance through government programs. While a short sale will affect your credit score, it will typically have less of a negative impact than a foreclosure, and you may be able to obtain other loans within a short period of time. 

Contact Our Cook County Real Estate Attorney

The process of completing a short sale can be very complicated, and it is important to work with an attorney who can help you understand your options and negotiate with your mortgage lender. At The Marques Eason Law Group, we can provide you with comprehensive legal help in these situations, and we will work to help you get back on your feet financially. Contact our South Side of Chicago foreclosure defense lawyer today at 773-973-3755 to learn more about the real estate services we provide.

Source: 

https://www.investopedia.com/terms/r/real-estate-short-sale.asp