How a Short Sale can Save You From the 2020 Mortgage Crisis

Covid-19 hit the first patient in the United States on January 20th in Washington State. After that event, a pandemic ensued, and the next couple of months both the U.S. and the global economy became one of the largest victims of the Covid-19. In the United States, states went into lockdown and watched both small and large businesses start to suffer from the threat of collapse. Unemployment rates skyrocketed soon after, and have only been drastically increasing every single week. Many people started to worry about figuring out a way to pay for their mortgages with no job, and no booming economy.The rise of concerns led the government into signing the CARES act in order to help stabilize the economy. Although the government and the federal reserve have been working together to try and save businesses impacted by Covid-19, many people are still struggling financially. With the stimulus package only giving out $1,200 per dependent, many people are unsure of how to pay their mortgage. 

As of April, the government has only allowed for mortgage forbearance for government backed mortgage loans. To get this mortgage forbearance, homeowners have to call their banks and discuss the CARES act and their mortgage forbearance options. The current CARES act allows a 180 day extension for all 1-4 level real estate (most residential property is 1-4) and only a 30 day extension for other types of real estate such as multi family. With economists predicting unemployment rates to rise to “Great Depression” levels; many people are starting to look at different options to avoid bankruptcy and foreclosure. The biggest option most homeowners seem to be looking at right now is the mortgage forbearance program. What most people are not realizing is the banks are not willing to add an extra 3 months of payment at the end of the mortgage, but expecting the money in the fourth month. Which means, they are expecting a lump sum payment of the first 3 months + the fourth month all on the fourth month. With no exceptions, and no federal punishment or regulations. This crushing lump sum payment makes it almost impossible for people to pay off their mortgage and WILL lead to foreclosure. The only other alternative to the foreclosure would be a short sale. Let’s discuss the pro’s and con’s of a foreclosure vs. a short sale.

One of the hardest parts about foreclosure happening on a home isn’t always the loss of a home, it’s also the financial and emotional after effects of a foreclosure, which include: low credit scores, inability to get any kind of loans due to a bad credit score, expensive lawyer fees, a loss of your main source of income (people can lose security clearances after a foreclosure appears on their credit report), owing money to the bank afterwards, and humiliation for losing a home. On the other hand, a short sale (when done by a proper expert) can help you avoid credit score impact, can help you owe zero dollars afterwards to the bank, and no lawyer fees, and could save your job as most jobs do bankruptcy checks nowadays, and can impact your ability to get hired. The biggest difference between a short sale and a foreclosure is that an experienced short sale expert can help you lessen the after effect damage and professionally take care of this huge issue for you, at no cost to you. 

Why You Shouldn’t Wait

With COVID-19 affecting the economy more and more every week, you are fighting an uphill battle by wasting time and “hoping for the best.” If you are in a tough financial situation, the power of calling now and trying to figure out if a short sale is the right option for you, will significantly help you out in the long run as short sales can take a while. Another benefit of calling now is being able to reap up the benefits of the current economy as many predict worse times to come. A short sale will help you navigate through your REAL circumstances before the bank can take advantage of you once again. Your short sale expert will also give you advice on handling current damaged credit, finding housing afterwards, and taking care of other financial issues you may be dealing with. By calling now, you have the power of time on your side.