Short Sales Increase Across Pennsylvania

Short sales are on the rise across central Pennsylvania. A short sale is a potential way to avoid foreclosure for homeowners who find themselves underwater on their mortgages. It allows home owners to sell their properties for significantly less than they owe with permission from their mortgage holders.

The Central Penn Business Journal reports some Pennsylvania counties saw sharp jumps in short sales in 2012. In Lebanon County, short sales increased 113 percent over 2011. In Harrisburg-Carlisle, short sales increased by 17 percent, and Lancaster saw 25 percent growth.

This rise in short sales is potentially good news for Pennsylvanians because short selling offers an alternative to foreclosure. In a short sale, the lender agrees to accept less than the full mortgage balance amount at the sale of the home in order to avoid foreclose.

The difference between the sale price of the home in a short sale and the mortgage amount is called the deficiency balance. Banks often are willing to forgive, or waive, the deficiency balance because short selling saves them foreclosure and resale expenses.

In addition to offering the possibility of a deficiency balance waiver, short selling may also be less damaging to your credit score than a foreclosure. But it depends on how the bank reports the short sale. The bank may report it settled. This indicates the bank accepted less than the value owed. A settlement has a negative effect on your credit. Banks can also report the short sale as a debt paid, which does not have a negative effect.

Negotiating with the bank to report a short sale as a debt paid is often tricky. Having a good payment track record is one factor that may help. Having an experienced debt relief attorney on your side can also help you negotiate with your lender. Contact Harold Shepley & Associates to learn about alternatives to foreclosure.

By Harold Shepley | Published July 16, 2013 | Posted in Credit, Debt | Tagged avoiding foreclosure, negotiating with the bank, short sale increases, underwater mortgages | Leave a comment