My partner and I receive phone calls each day from people who need help. They are behind in their mortgage payments and they don't know what to do. They have suffered a hardship of some type and cannot catch up.
We go over the items that help us determine what their choices may be. Is their loan original purchase money? This means is it the original loan. If they have refinanced, then the Debt Relief Act may not apply to them and there may be tax consequences. They will need to seek council from a Certified Public Accountant or a Real Estate Attorney.
Has there been a legitimate hardship. In order to qualify for a short sale, the seller must owe more on the home than the market value of the home and prove that a hardship has occurred. The hardship can be a death, loss of job, divorce, or financial. The financial hardship may often times be associated with the terms of the loan.
We talk with people who have equity in their homes and have suffered a hardship. If you can sell your home and pay your mortgage off, you will not qualify for a short sale or the Debt Relief Act.
You may be able to talk with your lender and negotiate a "workout". The lender has a number of programs to help you stay in your mortgage and "make it". Talk with your lender and try to negotiate terms that will allow you to keep your home and manage your finances. Seek financial advice from a professional on your long term ability to keep your home and manage your finances.
Get references for a mortgage professional that can help you assess your options for a refinance. Your property will need to appraise. There are programs out there that may assist you in obtaining a new loan. Certain conditions may apply.
Research the internet on your own and read everything you can. Learn about your rights and foreclosure. Get your loan documents out and understand your loan. Get help if you need it. You need to understand and own what your options are and what the right choice is going to be for you and your future.
If you discover that you are want to do a short sale, identify a Realtor that specializes in short sales and has successfully completed 80/90% of their short sales.
You should be expecting to list your home 10% below market value and to accept the strongest offer. You will open escrow and your Realtor will work to secure a back up offer. A complete financial package (hardship letter, 2 pay stubs, 2 tax returns, 2 bank statments) along with the purchase contract, a BPO and markt analysis, a HUD-1, MLS history and the various release forms are sent to the lender. You should receive news of the approval within 2 to 8 weeks depending on the lender and their process.
Learn about your options and make your choices based on your understanding and knowledge of foreclosure law in your state.
JEANEAN - This is good advice for homeowners that may find themselves in trouble. I think that too many people let pride get in the way, and wait too long to ask for help. Once they do, the process becomes that much more painful. I'd be interested to learn more about how to do a "workout" instead of going the short sale route.
Short sales are great to help a buyer out of trouble but miserable for the buyer and Realtors. I wish these banks would make a decision in a normal time frame. How long can it take to make a decision?