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Stop Alabama home foreclosure: short sale as an option

If you are in a financial hardship and cannot afford your mortgage even if it is reduced, there are ways to stop foreclosure. One way to stop an Alabama home foreclosure is a short sale.

stop Alabama home foreclosure short saleIf you are in a financial hardship and cannot afford your mortgage even if it is reduced, there are ways to stop foreclosure. One way to stop an Alabama home foreclosure is a short sale.

A short sale is when you sell your home for less than you owe on it because the property value has dropped. Your lender must agree to accept a payoff that is less than you owe. It also must approve any offers on your short sale. Your lender may choose to foreclose on your home instead of allowing a short sale, but typically it stands to make more money from a short sale than a foreclosure.

Do you owe more than your home is worth? Find out here.

To approve your sale, the bank will require:

  • That a drop in home prices is evident in the surrounding neighborhood and region.
  • The mortgage in question is in default or on the precipice of default.
  • You can demonstrate a significant decrease in personal income.
  • Your assets must are insufficient to cover the sale price/mortgage balance difference.

If your lender agrees to a short sale, find a real estate agent who specializes in pre-foreclosure sales. This agent can handle negotiations between the prospective buyer and your lender. Real estate agents also know how to negotiate third-party fees with attorneys, title companies, lenders and inspectors. They can also assist you in finding the buyer with the most generous offer. With the agent’s help, it can be fairly easy to stop Alabama home foreclosure with a short sale.

It is important to know that your lender could ask you to pay the difference between what you owe and the short sale. You want to get a waiver of the deficiency in writing. Additionally, the lender will send you a 1099 form for the deficiency balance, which is considered taxable income. Ask a real estate attorney or a certified public accountant about the Mortgage Forgiveness Debt Relief Act, which should waive the tax owed on this 1099 income.

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