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Banks are realizing the advantages of short sale transactions

When South Carolina families become bewildered by mounting debt and an underwater home mortgage, they may feel, at first, that their hands are tied. Though this is a tough situation to be in, there are several potential solutions worth exploring.

In general, home foreclosure has a stigma attached to it, so that may not be the most appealing option for all individuals. As such, recent reports indicate that many more homeowners are considering short sales to be one of the primary alternatives to foreclosure.

Lenders and investors are beginning to understand the benefits of going through the shot sale process, according to this month's report from Lender Processing Services. At this point, banks are getting about the same price on short sale properties as they are on foreclosed properties, so they too are seeing the value of this process over foreclosures. Throughout the economic recession, short sales have been gaining popularity.

Likewise, real estate market analysts have seen a noticeable shift away from real-estate-owned sales toward short sales. Over the last year, short sales have increased as much as 15 percent, while real-estate-owned sales have dipped nearly the same amount.

As we reported last week, lawmakers are also starting to see the value of short sales as a viable option, as a piece of legislation has been introduced in the U.S. Senate that would help consumers proceed with this particular real estate transaction. If this bill gains transaction, it may continue to boost the appeal of short sales as a viable option for those in financial distress.

The reality is that many families in Charleston are still looking for relief from their debt and are having difficulty keeping up on their home mortgage payments. In some cases, utilizing the short sale option may be the best way to relieve financial pressures and avoid foreclosure. Meanwhile, there may be other options to deal with an underwater home mortgage. As such, it may be helpful to explore all possible options to determine what is most beneficial and proceed accordingly.

Source: United Press International, "Banks and Investors Learn to Love Short Sales," Steve Cook, April 10, 2012

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