As the number of foreclosures increase at an alarmingly unprecedented rate due to higher interest rate adjustments as well as diminishing income levels more and more homeowners are quickly realizing the futility in trying to save their home from foreclosure. Homeowners, albeit current on their mortgages, in anticipation of no longer being able to make their payments as interest rate changes loom in front of them are increasingly exploring the options available to them in dealing with their unexpected predicament of having to pay hundreds, if not thousands of dollars more for each monthly mortgage payment.
Chaos is ensuing as homeowners come to grips with the grim reality of the situation. The media, coupled with local newspapers are, on a daily basis, conveying data to show the ever increasing rates of foreclosure. This constant barrage of negative foreclosure information has driven home to the general public the notion that home ownership is no longer a viable option. No longer are they trying to save their home at any cost, as so many did in the past by resorting to any type of loan at any interest rate or by filing a chapter 13 bankruptcy that was doomed from the start. Now, the new question is "How do I get this monkey off my back?" At a time when the once proud homeowner now can rent a similar dwelling he's living in for 1/2 the price, be able to afford it for his family, and be able to have excess disposable income left over for a better lifestyle it begs the question "Why Not Just Let the Bank Take it?"
The reality of the situation is that the glut of empty homes due to the rising tide of foreclosures has severely impacted the value of the housing market as well as the marketability of the majority of homes. Most homeowners, across the country, are finding it nearly impossible to sell their homes as savvy buyers are only looking to purchase the best of the crop at the lowest price possible. Saddled with bloated debt on property whose values have dropped to below what is owed the homeowner's past ability to be creative with either financing or in selling their property has ceased to exist.
Moreover, if one just lets the bank foreclose, they risk the bank obtaining a default judgment of foreclosure. If the foreclosure sale takes place and the bid amount is less than the obligation, a deficiency judgment will result, thereby giving the lender the opportunity to attach property to satisfy the judgment for many years into the future. Let us not forget about their ability to nonstop harass and harangue you with phone calls at all times of the day and night and weekend, further empowering them to have control over your life for many years into the future. In many instances this deficiency judgment involves hundreds of thousands of dollars of debt. Where is the light at the end of the tunnel?
Many lenders and mortgage servicing companies when first contacted by a soon to be defaulting borrower are actively pushing the notion of accepting a short sale rather than being burdened with eventually owning the property through a foreclosure sale. In fact, the only game in town, giving the homeowner the possibility of mitigating the seriousness of the repercussions of letting the bank take the property back is to do a short sale. The short sale will avoid the disastrous effect of having a foreclosure sale or bankruptcy on ones credit report.