In situations where the homeowner does not want to retain ownership of the home, the following disposition options may be available as an alternative to Foreclosure. These options affect the owner’s credit rating less than a Foreclosure will.

1. Sell The Home: If there is sufficient equity in the property, the owner may be able to receive more for their property than what is due on the mortgage loan.
2. Assumption: With this option, the owner would sign over the property to another person. That person would then take possession of the home, and take over making the payments.
3. Pre-Foreclosure Sale (Lancaster SHORT-SALE): This option may allow the owner to sell their property for an amount less than what is necessary to pay off the mortgage loan. 
4. Deed In Lieu Of Foreclosure: This option may allow the owner to voluntarily "give back" the property to their Lender without further damaging their credit.

Pennsylvania Housing Finance Agency   www.PHFA.org    HOTLINE  800-342-2397

I.        Lancaster SHORT SALES will have a negative impact on the owner’s credit similar to a foreclosure for a period of time and will most likely prevent them from obtaining another mortgage at a favorable rate for at least 24 months (based on current Fannie Mae rules).

II.    Except for certain conditions pursuant to the Mortgage Forgiveness Debt Relief Act of 2007, be aware the I.R.S. could consider debt forgiveness as income which could result in the owner owing taxes resulting from the sale of the property and/or the forgiveness of debt by the lender.

III. A lender who accepts a Lancaster short sale may pursue a borrower for the difference between the amount owed and the amount paid. In some states, this amount is known as a deficiency. A lawyer can determine whether the loan qualifies for a deficiency judgment or claim.

IV. The Lancaster SHORT SALE process can be lengthy.  Many lenders will take 4-16 weeks to negotiate and accept a contract and settle.