Can a short-sale stop home foreclosure?

When a person in Colorado is facing foreclosure, it can be incredibly stressful. After all, that person may have tried selling the home at a price that would allow them to pay off their mortgage, but could not find a willing buyer, especially if the value of the home is less than what is owed on it. And, losing one’s home to foreclosure can be a terrible blow that only exacerbates a person’s financial troubles. If a person finds themselves facing foreclosure, they may have some options for stopping the foreclosure process. One of these options is a short-sale.

In a short-sale, the lender is willing to release the homeowner from some or all of their mortgage obligations even if the homeowner sells the home for less than it is worth. This could put a stop to foreclosure. In addition, a homeowner who sells their home through a short-sale will not take the same credit hit they would experience if their home was foreclosed upon.

However, a short-sale may only be an option in certain situations. For example, it may be an option if the homeowner is unable to refinance their mortgage, is under a long-term financial hardship, is in arrears on their mortgage payments, owes more than the value of the home and is unable to sell their home for a price that allows them to pay off their mortgage in full.

While a short-sale may mean you can no longer keep your home, sometimes being free of the burden of owing a debt you cannot pay is worth it. After all, once one is no longer responsible for paying a mortgage, this can free up financial resources needed to find a more suitable place to live or address other financial issues. The foreclosure process is a legal process, and once started only certain acts can stop it. A successful short-sale may be one of these acts.