Metro Detroit short sales

If you are trying to decide whether to let your home go to foreclosure or do a short sale this is my thoughts.  Would I list my Metro Detroit home as a short sale or let it go into foreclosure?


REPAYMENT Yes you could owe the bank the difference of what you owe.   Many agents gloss over this.  You should have a signed letter from the bank saying that you won’t owe for the deficient.  Bank of America makes you sign that you are responsible for the loss. I have never heard of a bank coming after you.  President Bush signed a bill exempting principal resident sellers from getting a 1099 for taxes.
EASE of DOING Horrible.  Banks take their sweet time and do not communicate well at all.  You never know what is going on.  Your bank will want income documents, explanations and proof you can not pay. Very easy to do.  Just don’t pay the bill.  No having to clean the house for showings.  No jumping thru hoops to prove to some bank guy in some other state.
TIME NEEDED Metro Detroit short sales can take from 2 months to 6 months to complete. In Michigan when you don’t pay your mortgage for three months you go into foreclosure.  Then a sheriff sale is scheduled.  Then you can live in the house for 6 months from the date of the sheriff sale.  This could add up to a minimum of 9 months of free living for somebody that can’t pay.
MONETARY ADVANTAGE In a short sale you could owe and be responsible after the short sale loss. You can live for up to 9 months free and maybe more.  You should be able to save to get back on your feet and have deposit money for a rental apartment or home.
CREDIT ADVANTAGE A bank won’t let you do a short sale if you are not behind on the mortgage.  So you have to have mortgage lates.  The issue is how many mortgage lates and how many months behind are you.  90 days late is considered by credit reporting agencies as a foreclosure whether you are in a foreclosure or not.  No bank will give you a loan for a new home for 3 years either. If you pay the rest of your bills and maintain the rest of your credit you should be able to buy another home in as little as 3 years.

Bottom line in my opinion it is crazy to do a short sale.  The one glaring reason is why would you open yourself up to owing money by doing a short sale.  Let it go to foreclosure and be done with.

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