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Forced to Move

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If you are in a position where you are forced to move, say by job transfer or because of health and clinic
attendances, and you cannot sell your home, what can you do?

moving, home sales, selling real estate, short sales, foreclosures

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If you are in a position where you are forced to move, say by job transfer or because of health and clinic
attendances, and you cannot sell your home, what can you do?

Well, first let's clarify the issue: chances are, you can sell your home - but you don't want to sell it for a
nominal amount. You don't want to sell it for an amount below its value, or worse yet – you don't want to
sell it for below what you owe on it.

Some people just walk away from their home and start over - not advisable. This impacts your credit rate
badly – in fact, it is the worst possible thing you can do to it!

One possibility for solving this matter is to tell your Lender the truth. The Lender does not want the bother
of foreclosure either; it will cost their company money. If you tell your Lender that you cannot pay the
monthly costs, you can then ask them if they can help you with a short sale on your property.

In order to back this request up, you will need to have a copy of a financial statement that you will have
drawn up. This will show your assets and wages and will prove to them that you have no more money left to
pay the mortgage.

You will also need a current market evaluation of the property from your real estate agent, and an offer from
a prospective buyer. If you don't have this, you will need to persuade your Lender that you can arrange all

This is where the crunch comes, because you must be genuinely without cash, assets, savings, investments
or liquid retirement funds and anything else that could be turned into cash.
The reason for this stringency is because the Lender is going to take the loss for you. Therefore, he wants to
make sure that you are not pulling a fast one on him!

Here is what happens: your mortgage is worth $400,000. Your house, at this time, is only worth $370,000.

You will lose $30,000 plus costs. If a buyer can be found, the Lender will 'write off' his loss of $30,000 and
you will leave the house behind you - but with your credit rating still intact.

You will have to talk to the Loans Department of the Lender concerned. Once this is done, your real estate
agent will start to prepare the deal.

At this point, both you and the buyer will have to be patient. There are several people involved in the
decision over whether to accept the prospective buyer's offer or not. Firstly, the Lender is probably only the
middle man, so he has to get agreement from the actual 'investor'. Assuming you have mortgage insurance
on the loan, the next step is to get the Insurance Company to agree.

Short sales can take even longer in cases where there is a second mortgage held on the property; they also
want 'a cut' of the capital released; sometimes having the second mortgage on a property makes the deal too
difficult to negotiate.

In a short sale, at least your credit rating has been preserved which means that when you feel more
confident, you may buy another home to own. There is one positive aspect to all this, and that is your newly-
acquired expertise in short sales procedure. You are now familiar with it, and may be able to buy a new
home through a short sale, thus offsetting some of your losses.

Be aware that the IRS looks upon short sales as a forgiveness of debt, and as such this counts as income.
This means that you have to declare it to the IRS in your yearly returns.

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