short sale vs foreclosure

[pscott]

My jurisdiction is: florida

my mother has a home and she is upside down with the mortgage. she ahs started short sale and the bank agreed and then they sent her foreclosure papers. is this standard or are they serious? she doesnt know how to proceed at this point. can you advise, please.

 

[FlaRiptide]

An agreement to a shortsale does not prevent the foreclosure proceedings from happening. I assume she has missed more than a couple of monthly payments? Normally a foreclosure takes a long time. A shortsale can take quite a while also. Hopefully the shortsale will be completed prior to the foreclosure.

When you say that the bank agreed to the short sale, do you mean that a signed sales contract has been presented and accepted? If yes, then the foreclosure will be stalled. Upon the closing of the shortsale, the mortgage company will no longer follow thru with the foreclosure. After approx. six months of non activity the foreclosure will be closed. There is no need for your mother to do anything regarding the foreclosure. She does not need to answer the summons.

The bad news is her credit will be ruined. (Doesn't matter if shortsale or foreclosure). The good news is that the forgiven debt will not be taxable as long as this was her principle residence (lived in for 2 of the past 5 years).