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Why prevent Foreclosure?: The Deficiency Judgment

The ramifications of a Foreclosure are significant in not only the emotional and psychological damage it rears, but also the ongoing FINANCIAL BURDEN and possible lingering LEGAL hassels.

Many struggling homewowners and investors who are “underwater” or the owe more on the house than they can sell it for are simply continuing to do things the OLD FASHIONED WAY: They either sit and wait out the market in hopes it returns to the booming levels of yesterday, or they call up their friendly Realtor who sold them the house in the booming market, or they give up all hopes and WALK AWAY. All three of these likely situations are NOT THE ANSWER, here’s why:

  • The market is in a DEPRECIATING CYCLE, which means it reached its appex in 2005 and is now in correction. The current rate of declinging home values in Maine is 14% per year, and picking up steam. This basically means that if you are maxed out in your equity position or have about 5 to 1o% in equity – IT WILL BE GONE in about a year.
  • The OLD FASHIONED real estate broker who sold you your home DOES NOT KNOW the intricacies of the SHORT SALE process. It is complicated and they just don’t want to educate themselves on how to get it done. If they do take on a Short Sale listing they will likely OUTSOURCE the Loss Mitigation to a 3rd party which means ADDED costs to the Buyer and Seller.
  • If you surrender and simply DO NOTHING and let the home go to Foreclosure many devastating things will happen: 1) Your credit will be ruined for at least 10 years (which is the least of your worries) 2) The Bank may obtain a Deficiency Judgment against you for what is LEFT OVER if the home sells for less than what is owed on the balance at auction. 3) You may be sent a 1099 as TAXABLE INCOME GAINED from the LEFT OVER balance . This is reported as INCOME to the IRS and you will be taxed at the higher tax bracket around 30%.

So what’s the GOOD NEWS?

The right SHORT SALE EXPERT will have the knowledge to handle the Short Sale/Pre Foreclosure Process and handle the Lender’s Loss Mitigation Department’s difficult negotiation tactics. This Short Sale will PREVENT FORECLOSURE and will EDUCATE the home Seller on how to PREVENT a Deficiency Judgment and how to SET-OFF a 1099 for ADDED INCOME.

A SHORT SALE Service is absolutely FREE to the SELLER and BUYER!

Call us today to discuss this process at 207-400-4413 for a confidential consultation with a NON-PROFIT Pre-Foreclosure Advocate.