As of late it has been reported that, for homeowners who are pursuing a short sale, changes in these practices by many major financial institutions could be good news for those who are looking to get out of a negative equity situation by selling their home at a loss. Earlier this year we saw that more banks are becoming proactive in terms of contacting homeowners or even speaking with realtors about properties that are soon to be on the market, but there are also reports which have surfaced here in the later parts of June that state some banks are giving homeowners greater incentives and financial assistance when it comes to processing these short sales.
Yet, there are some who wonder if these new practices and short sale procedure are in fact helping homeowners or potentially putting them on a path that could lead to financial damage, in terms of their credit score. Months ago it was reported that research conducted by FICO found many homeowners fared almost the same in terms of the decrease they saw in their credit score when they participated in a short sale then had they simply gone through the foreclosure process. While foreclosures can be costly to not only banks but homeowners as well, there are some individuals who wonder if foreclosure prevention efforts should not be the area where banks are giving their attention as some homeowners in a negative equity situation who require a short sale may be able to find more affordability and keep their home.
There are groups of homeowners who feel that the loss of value in their home is reason enough to simply walk away if a short sale cannot be conducted, but there are still men and women who wish to keep their home despite having seen the property value decrease over the past months and years. While there are underwater refinancing options and programs that can simply offer affordability in terms of the homeowner’s mortgage payment, those who are looking to short sell are finding that banks may be not only able to offer cash incentives for homeowners, in terms of helping them relocate or simply as a way to carry them through the short sell process, but again, some homeowners may be finding that banks are reaching out to them to begin the short sale process.
Sadly, decreases in equity and factors like long-term unemployment have made keeping a home incredibly difficult for some, but no matter where an individual falls in terms of the argument that is for or against short sales there are those who feel that this can be a beneficial practice, even if a short sale does hurt a homeowner’s credit score. Simply limping along and trying to stay afloat can cause other areas of a homeowners financial life to take a hit, and there are some indications that lenders are viewing homeowners who keep other areas of their finances current, but may have fallen behind on their mortgage, as less of a risk than they may have been viewed in the past. Also, since banks are also being more active in terms of short sales, this could lead to situations where homes that may have been foreclosed on and simply left sitting empty could be filled in a much timelier manner and as a result leave less inventory on the housing market to bring down home prices.