Falling behind on your mortgage payments will lead to your lender starting the foreclosure process. When this happens, you will have to decide quickly what to do. While there are several options, you might decide that a short sale would be right for you. If you decide to do this, or if you would like to learn about other options, you should consult with a real estate attorney before proceeding. Your attorney will help you in the following three ways.
Discuss Your Options
The first way a real estate attorney can help is by discussing your options with you. Your attorney will need to know the details of your personal financial situation before he or she can do this though. As you explain your situation to him or her, make sure you clearly state why you experienced problems paying your mortgage. Your attorney will need to know:
- How much your mortgage payments are
- How far behind you are on the payments
- How much income you have
- What debts and expenses you have
In addition, your attorney will also ask your opinion on what to do with your house. If you really want to keep the house, using a short sale will not be a good option. Instead, your attorney might be able to convince your lender to modify your loan. If you decide there is no way for you to keep the house, using a short sale can be a good option.
Negotiate With Your Lender
The second way a real estate attorney will help is by negotiating with your lender. A mortgage lender will not always just agree to let you use a short sale to sell your house. It may take some persuasion to get this done, and real estate attorneys are good at that.
With the information you supply to your attorney about your financial situation, he or she will make a compelling case to the lender. Your lawyer will also make sure the lender receives all the documentation and information needed to approve the short sale.
During this process, your attorney will act on your behalf to get the short sale approved, and to get the terms of the sale beneficial for you.
Help You Avoid A Deficiency Judgment
Finally, to use a short sale to avoid foreclosure, you will have to understand what a deficiency judgment is. This judgment is something your lender could issue if you sell your house for less than what you owe, which is typically how a short sale works. The amount of the judgment will be the difference between your loan balance and the proceeds from the sale of the house.
If the lender issues a deficiency judgment for this amount, you will be obligated to pay this amount to your lender. This does not occur with all short sales, but it does happen with some. If you are required to pay this difference, you will probably not be in any better financial shape by using a short sale.
This is why you need a real estate attorney. Your attorney, someone like Madigan & Scott Inc., will fight to get your lender to agree to forgive the deficiency amount, which means you will not owe the money. If this cannot be accomplished, your lawyer might suggest going through with the short sale, but filing for bankruptcy afterwards to clear up the judgment amount.
One thing you might not be able to get out of is paying taxes on the deficiency amount. Even if your attorney is able to convince your lender to forgive the deficiency on the sale, you will still typically be required to pay taxes on the amount of the deficiency.
Before you decide what to do about foreclosure documents, consult with a real estate attorney. Through this, you might find that using a short sale is your best option.