Question

If a homeowner in mortgage distress owes more than the value of the home and is unable to make the loan manageable by refinancing or modifying the mortgage, the next recourse often is a short sale of the property. All of the following statements are true regarding a short sale except
a. Legal costs should be lower with a short sale than with foreclosure.
b. A shopt sale is usally enables a better sale price and a faster sale than foreclosure.
c. A short sale is less damaging to the borrower's credit than a foreclosure, thereby enabling the borrower to be eligible for another mortage loan sooner.
d. A short sale relieves the seller of any other outstanding obligations on the home such as owner association fees or a second mortgage

Answer 1

Answer: All of the following statements are true regarding a short sale except:

• Legal costs should be lower with a short sale than with foreclosure.

Explanation:

A short sale is when an owner sells his house for less money than he owes in the payment of the property. The homeowner negotiates a discounted payment with his mortgage company without having to arrive with cash to cover the deficit. At the end of a short sale, the mortgage and property liens will be considered satisfied and any foreclosure process will be stopped.

Foreclosures are made by people who really do not have the money and cannot settle small fees. Although this will give you more credit deductions, you will save any fees charged.