5 Things You Need to Know Before an NY Short Sale

As any Goshen NY foreclosure lawyer will tell you, sometimes it pays to fight foreclosure proceedings against your commercial or residential property. There are actually several options at your disposal to postpone or prevent a foreclosure, and the outcome of these alternatives can be financially and emotionally beneficial. One way to fight foreclosure is arranging an NY short sale of the property.

An NY short sale is the sale of real property where the amount of proceeds from the sale isn’t enough to cover the amount of a mortgage or other debt on the property. This leaves the bank or other lender holding outstanding debt from the sale, but prevents a foreclosure action. Often, a short sale is preferable to the process of foreclosure, eviction, and subsequent sale for a property owner.

A Goshen NY foreclosure lawyer can help with the short sale process. However, before you pursue a short sale to fight an impending or possible foreclosure, you should know these five things.

#1: An NY Short Sale Can Sill Impact Your Credit Rating

Short sales are often proposed by real estate agents to Goshen residents as a way to avoid the damaging impact of foreclosure on your credit rating, but this pitch doesn’t fully represent the impact of a short sale on the property owner. A Goshen NY foreclosure lawyer has greater incentive to be upfront about the repercussions of a short sale than real estate agents. More than likely, an NY short sale will still negatively impact your credit rating.

Banks and other mortgagors aren’t huge fans of NY short sales because part, sometimes a significant part, of the owed debt is still outstanding after the sale. This makes negotiating a short sale with the bank’s involvement and cooperation quite difficult. After the sale, a bank is very likely to report the short sale. This will show up on your credit report and lower your credit rating, making the possibility of a new mortgage or line of credit harder to obtain.

#2: You Are Eligible to Purchase Property Sooner After a Short Sale

After a foreclosure, reputable banks and lenders will impose a five to seven-year hiatus on your ability to buy another residential property. This leaves you as a renter for all of these years, without any option to change your circumstances or build equity in a new piece of property. The long-term impact of a short sale isn’t as severe.

If your bank agrees not to report the short sale, you are eligible to purchase other property immediately. There will be no indication to a future lender that you missed mortgage payments or failed to fully pay your previous property debt. Yet, as discussed, convincing a bank not to report an NY short sale is a long shot.

If your bank does report the short sale, best practices and guidelines from credit agencies prevent you from purchasing other property or obtaining a mortgage for two years. This shorter timeframe has definite advantages for anyone that wants to leave the rental market quickly and efficiently.

#3: A Short Sale Stops Your Mortgage Payments

A short sale is a final and formal sale of your home, which releases you from the mortgage obligations on that property. Once you’ve decided to sell your property in a short sale, you don’t need to make further mortgage payments. The proceeds from the short sale will be applied against your outstanding debt, and the keys handed over to new owners.

#4: You Need to Negotiate with the Bank

Before you proceed to a short sale, you need to be certain that the bank is willing to accept the terms and conditions of that sale. Most importantly, you need confirmation that payment of the sale proceeds will wipe your outstanding debt, even if that debt is more than the proceeds. Often, banks are amenable to a well-crafted and strategic short sale proposed by a Goshen NY foreclosure lawyer, but certain terms are non-negotiable.

The bank will require all proceeds are paid against the mortgage. A bank will only consider the option of a short sale if mortgage payments are past-due and there is verifiable evidence that the property owner won’t have the financial resources or opportunity to make these payments. The bank will want direct involvement in the short sale of your home and will be present at the closing to accept custody of the proceeds from the sale.

#5: You Will Need to Provide Financial Evidence to the Bank

The bank is going to require evidence of your financial hardship in order to approve a short sale offer. In some instances, the bank may require your Goshen NY foreclosure lawyer to collect a significant number of documents, but you can always expect to provide recent tax returns, information on your bank accounts, including past statements and current balances, and a list of your assets and other debts. You or your Goshen NY foreclosure lawyer will also need to prepare a hardship letter for the bank.

Hiring a Goshen NY Foreclosure Lawyer

While many homeowners prefer the short sale process to foreclosure, there are definitely setbacks and implications that need to be known or explained. Unless you have in-depth information and familiarity with the NY short sale process, you should speak to a Goshen NY foreclosure lawyer before starting the process.

Our team at Simon Haysom, LLC is happy to provide a comprehensive look at short sales and offer advice on your own property. Call us at (845) 294-3596.


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