Homeowners in our area who may be having trouble making their mortgage payments or who have not made one or more payments. They may be in a situation where they do not know their options. The current financial market is confusing for many home owners and the onslaught of organizations wanting to prey on homeowners for a quick profit has grown alarmingly. Page three of this letter provides you some contacts that you might find of use.
Your options if you are facing FORECLOSURE
1. Do Nothing – If a homeowner does nothing, they most likely will lose their home to foreclosure. Loan applications always ask if you have been foreclosed upon. Credit reports also disclose any foreclosures for a minimum of seven years. This will negatively affect an individual’s ability to obtain financing during those seven years. This is NOT THE BEST OPTION.
2. Payoff/Refinance – Pay off the entire loan balance plus any default amount and all fees charges by the lender. Usually, this is accomplished through a refinance of the debt. The new debt is frequently at a higher interest rate. There can also be hidden snags like prepayment penalties because of your recent default. In order to accomplish this option you must have sufficient income and equity in your home to qualify.
3. Reinstatement – Pay the entire default amount, plus interest, attorney fees, late fees, overdue taxes and various bank fees. These charges add up quickly.
4. Loan Modification – Work with your existing mortgage company to modify the terms of your present loan. This may allow the homeowner to catch up on their loan commitment at a more affordable level. To qualify, you must prove to the lender that you have fixed the problem that caused the default. You must have sufficient income to satisfy the lender. In some cases they will allow you to change the term of the loan from 30 to 40 years, reducing the monthly payment.
5. Forbearance – The lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or a suspension of payments. Documentation will be required by the lender to show that you will be able to meet the new payment plan requirements.
6. Partial Claim – Obtain a loan from another lender for a second loan to pay back payments, interest and fees on the delinquent balance. You must have the income and equity in the home to qualify.
7. Deed in Lieu of Foreclosure – Giving the property back to the bank instead of letting the bank foreclose. Banks usually require that the home be well maintained, all mortgage payments and taxes must be current. Loan applications also ask if you have relinquished a deed in lieu of foreclosure: impacting your ability to obtain financing in the future .
8. Bankruptcy – This can liquidate debt and/or allow you more time. You should consult an attorney if you are considering this option.
Chapter 7 – Liquidation – To completely settle personal debt.
Chapter 13 – Wage earner plan – A payment scheduled is worked out to pay off debts.
Chapter 11 – Business Reorganization – A business debt solution.
9. Sale – If there is sufficient equity, the homeowner can sell and pay off all debts resulting from the delinquency. No lender approval is required.
A Short Sale can be negotiated with your lender by your real estate professional if what is owed is more than the property’s value. More about this on the next page.
What Is A Short Sale & Why Should It Be An Option
A Short Sale is when we list your home at a price that’s reflective of the comparable sales of similar homes in the area. In doing so we obtain offers at today’s value and submit them to your lender(s) for acceptance as a short pay.
Will it save my credit? Nobody knows how it will affect your credit because the final determination is made by the decision maker reviewing your credit in order to approve a purchase. In general, if you are not behind on payments or at an early stage in your missed payment, the missed payments will have less of an impact on your credit. Foreclosures and Bankruptcies are the worst items you can have on a credit report. They will impede or prevent you from borrowing on credit for seven years.* Depending on how your lender reports you short pay, “settled for less than owed” or just “settled” may have less impact than foreclosure or Bankruptcy. WE believe anyone going through a Short Sale of Foreclosure needs to take a Consumer Credit Counseling to learn the steps to re-establish their credit for the future.
* Fair Credit Report Act allows the legal action of Foreclosure to remain for seven years of the date of filing.
What are some of the benefits? A sense of pride that you attempted to work our your situation in the best possible way, is a frequent response from our clients. Less stress from the constant collection calls. More time in your home to create a better plan for moving. Your home remains vacant less than it would as a Foreclosure (important for the friends in your neighborhood who would be impacted by your home being vacant). Possible relocation payment. **
** Relocation payment of $ 1500 proposed as part of the Making Home Affordable Program
What are some of the challenges? They can take a long time. Lenders require copious documentation and paperwork. Lien holders are not required to accept a short pay. They require a lot more work, so most agents are reluctant to take on the responsibility.
Our Solution Heritage Oak Properties provides Short Sale Representation to Sellers in the sane manner we represent all of our clients every day, with sensitivity, respect and honest representation. We tell you up front what we need to complete your Short Sale and provide updates weekly, more often when required. Your home will be marketed professionally with maximum Internet exposure (leveraging our knowledge as an e-PRO) , color flyers, multiple photos and more. The home is not marketed to the public as a Short Sale and there are no Pre-Foreclosure signs or riders. We are required to advise other Realtors of the status, but will only advise serious buyers as part of the required disclosure process. We will also keep you apprised of new legislation that may assist you during and after the completion of the Short Sale.
We have completed an extensive course covering the sale of distressed properties and hold a CDPE (Certified Distressed Properties Expert) designation. While the “Expert” may be a bit grandiose, the knowledge is priceless. It also places us in a community of Relators who hold this designation, providing an inexhaustive resource to difficult and unique situations.
CONTACT MIKE WEST TODAY
FOR A CONFIDENTIAL CONSULTATION AND INFORMATION PACKAGE.
(916) 337-0658
Directory of References and Help Lines
Homeowner’s Assistance Foreclosure Line
Phone: 1-888-995-Hope
Website: www.995Hope.org
U.S. Department Of Housing & Urban Development
Phone: 1-202-708-1112
Website: www.HUD.gov
Fair Housing Administration
Phone: 1-800-Call-FHA (225-5342)
Website: www.FHA.gov
HUD Approved Housing Counseling Agency
Phone: 1-800-569-4287 9AM – 5PM EST
Website: www.HUD.gov
Our direct link to Sacramento HUD Approved Agencies: www.HUDApprovedAgencies.com
Making Home Affordable Program
Website: www.makinghomeaffordable.gov
