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This situation is known
as a "short sale." Sometimes home owners
can negotiate with lenders and have them split the
difference between the sale price and loan amount,
which still must be paid.
A short sale may be complicated if the loan has
been sold to the secondary market because then the
lender will have to get permission from Fannie Mae
or Freddie Mac, the two major secondary-market players.
If the loan was a low-down-payment mortgage with
private mortgage insurance, then the lender also
must involve the mortgage insurance company that
insured the low-down loan.
Resources:
* "How to Fight Foreclosure," Jeff Jensen,
Jensen Publications, 200 Main Street, Suite 104-201,
Huntington Beach, CA 92648; (714) 843-0321.
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Lenders will initiate
foreclosure proceedings when homeowners become delinquent
in their mortgage obligations, usually after three
payments are missed. The lender will then notify the
buyer in writing that he or she is in default. The
lender can request a trustee's sale or a judicial
foreclosure, in which the property is sold at public
auction.
A borrower can cure the default by paying the overdue
amount and the pending payment after the notice
of default is recorded, usually no later than a
few days before the property's sale.
Some sales allow the successful bidder to take
possession immediately. If the former owner refuses
to vacate the premises, the court can issue an unlawful
detainer that allows the sheriff to come out and
evict them.
Borrowers should do everything they can to avoid
foreclosure, which is one of the most damaging events
that can occur in an individual's credit history.
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