Foreclosure is a legal process where the lender acquires the title of the property from an owner who has stopped making payments on the loan.
However, the implication of a Foreclosure are severe drop in the owners credit score and substantial loss in their ability to borrow money in the future. In fact, results of the Foreclosures appear on the owners credits history for up to 7 long years!
There are alternatives to Foreclosures which are Deed in Lie and Bankruptcy and they will be covered under different blogs.
One of the best alternatives to a Foreclosure is Short Sale where the lender(s) agree to the sale of the property for less money than it’s owed on the property.
The benefits of the Short Sale are than the home loan is reported to the credit agencies as “Paid/Satisfied” which minimizes any damage to the owners credit score.
In addition, most lenders now offer Relocation Expenses as part of the Short Sale negotiations to motivate the owner to vacate their property where they have stopped making payments.
Another feature of Short Sale is that in most cases there is No Cost to the Seller for the Short Sale and majority of the costs are covered by the lenders. However, you should contact an experienced Short Sale agent to better understand all your options.