Homeowners with an underwater mortgage have turned to various options which can make their home more affordable, but one plan that has been used to assist individuals that may have trouble with the fact they are paying a mortgage on a home that is worth less than they owe is a short sale. Short sale options have, in many cases, been used to help homeowners who may face foreclosure due to their inability to make payments on an underwater mortgage, but some homeowners have attempted to use this option simply as a way to get out from under their underwater mortgage payment obligation.
Short sales have helped homeowners avoid the formal foreclosure process through efforts like the Home Affordable Foreclosure Alternatives Program, but there are some individuals who may not benefit from a short sale or may not qualify. There are certain instances where a homeowner may short sell their home but a bank may have the option to pursue the homeowner in order to collect money on the debt which was not paid.
Usually, homeowners who qualify for plans like the Home Affordable Foreclosure Alternatives Program can short sell their home and this will be viewed as full payment of their mortgage obligation by the servicer. This option has helped many homeowners as they have been able to sell their underwater home and they don’t have to worry about being pursued by their financial institution for recourse of nonpayment on their home loan debt.
While short sales may be helpful for some homeowners, advisers often suggests that individuals who may be considering this option either talk with their servicer or a mortgage counselor in order to seek advice on whether a short sale would be in their best interest. Obviously, homeowners who participate in the short sale of their home will not be helped if a bank can continue to pursue debt that they owe, as they could simply have stayed in their home and continued making payments rather than go through the process of relocating only to be pursued for nonpayment of debt.
Again, short sales can be helpful for certain homeowners, but it will be dependent upon a homeowner’s financial position, their underwater situation, and whether a bank may opt to pursue them if they participate in a short sale program in an area that allows the servicer to take action against nonpayment of their mortgage debt.