Despite national five-year low, Atlanta foreclosures increase (2)
Earlier this week, we wrote about the new report which stated that the national foreclosure rate has dropped to a five-year low. As previously discussed, that initial report of a falling foreclosure rate does not paint a complete picture of the situation in states like Georgia, where foreclosures have increased year-over-year.
The report also highlighted the recent trend toward short sales, which mortgage lenders have increasingly embraced in the past year. Short sales are an alternative to foreclosure in which lenders agree to sell a property for less than it’s worth.
In an effort to sway borrowers with underwater mortgages, many lenders have begun to offer incentives to homeowners who seek a short sale instead of allowing their home to go into foreclosure. For example, Bank of America is reportedly giving up to $30,000 in relocation assistance to homeowners who complete short sales and meet various qualifications.
As a result, the ratio of short sales to foreclosures increased for many of the top mortgage lenders in the county in late 2011 and early 2012.
While a short sale may seem like a good idea, it can end up causing a substantial amount of harm to the homeowner’s finances and credit. In an average short sale, the homeowner will wait for months before the lender agrees to the sale, before a potential buyer makes an offer on the house, before the lender approves the contract with the buyer, and before the buyer can get financing.
If the sale goes bad during any part of this process, the homeowner will find him or herself even farther behind on their mortgage payments. Therefore, if you are considering a short sale, you are advised to talk to an experienced bankruptcy attorney to determine if it is the best step for you.
Source: CBS MoneyWatch, “Foreclosures reach lowest level since 2007,” Ilyce Glink, May 17, 2012