San Diego Homes

San Deigo County Foreclosure -vs- Short Sale

Mindi Landry has 34 years of experience in helping you sell or buy a home. She can answer all of your short sale questions, because she’s handled so many of them. Feel free to contact her at (760) 737-3767.

San Diego County Foreclosures

As of 10-18-2010, 14,500 homes in San Diego County were in the process of foreclosure. Only 7% or about 1000 of the homes in the foreclosure process were listed for short sale. 93% of these San Diego homes will foreclose within the next 6 months. Their owners will suffer the negative impact on their credit record for 7 years.

What is a foreclosure and how does it affect your credit record?

A foreclosure is a legal action, by the bank which holds the mortgage on your property, because of nonpayment of the mortgage. In California, homeowners are sent a Notice of Default or NOD at 90 days or 3 months of nonpayments. The NOD lets the homeowner know what steps they need to take to bring their mortgage current.  At 180 days or 6 months of non payments, the lender will send a Notice of Sale, or NOS. The NOS lets the homeowner know that their home is being sold at auction and when and where the auction will be held. It will also give them information on how to ‘cure the default’ or bring the mortgage current, so they can keep the house.

Usually your FICO score drops anywhere form 200 to 400 points after a foreclosure. The foreclosure will remain on your credit record for anywhere from 7 to 10 years. You may be eligible to buy a home again after 5 years. But there will be restrictions on the purchase. After 7 years, you’ll be able to purchase a home without restrictions.

What is a Short Sale?

This is when the homeowner sells their home for less than the balance owed on the loan. Short sales occur when a homeowner can’t pay the mortgage on their property. The homeowner then asks permission from the lender to sell the property at a moderate loss. The homeowner and the lender must agree to the short sale process. Short sales allow the homeowner to avoid foreclosure. The lenders are able to forgo foreclosure costly fees which may offset the loss they are taking on the mortgage. Usually a short sale is a win win win situation for the lender, the home seller and the home buyer. The drawback to a short sale is that it may take 6 months to 1 year to negotiate the deal with the mortgage holder.

Why aren’t more homeowners in San Diego using short sales?

A homeowner doesn’t have to be in default on their home loan to use a short sale. They just have to have the lender agree to the sale. A lot of homeowners that are upside down on their mortgages don’t know that this tool is available to them.

Some owners are in denial. They ignore the letters from the lender. They keep hoping they’ll be able to catch up.

Other owners are just angry. They’ve tried to get a loan modification from their bank and have received little or no help or assistance. They choose to fight the bank. In a fight, the big guys usually win. So they end up losing their home to foreclosure.

Some people are so confused by the many options out there, both legit and shady, that they just give up and do nothing. This is when calling an experienced real estate agent can tremendously benefit the homeowner.

Mindi Landry is an Escondido Realtor and has 34 years of experience in helping you sell or buy a home. She can answer all of your short sale questions, because she’s handled so many of them. Feel free to contact her at (760) 737-3767.

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