Information and Resources

 FNMA:  FNMA chart forclosure vs short sale.pdf

What should I do when I get behind on my mortgage payments?
Do not ignore this issue. By doing so, a sheriff might knock on your door to have you vacate your home. This is a serious matter and is extremely time sensitive.

Stay in your home. A vacant home is harder to qualify for foreclosure help. This is your home, stay there.

Contact us immediately to discuss the best foreclosure plan. Do not waste time, contact us today.

Do I sign my home over to anyone or to a company?
Absolutely NOT… We are here to help prevent foreclosure and sell your home. Other companies out there try this; please do not sign your home over to ANYONE.

What we do NOT do.
We will not take no for an answer from the lenders. We will not ask you to sign over your home to us. We will not ask to be added to the title of your home. We will not buy your home from you. We will not loan you money. We will not guarantee anything from the lender.

What liabilities could result from a Short Sale?
A lender could possibly 1099 you for the difference in what you sell your property for and what was owed on the property. What this means, the IRS could consider this taxable income. Another result could be the lender requiring a portion of the difference to be paid back in form of an unsecured note. All of this is up in the air until these items are negotiated. That is were we step in to help you. We want to have the lender consider the debt SETTLED.

What liabilities could result from a Foreclosure?
Unlike a short sale, a foreclosure is usually sold at auction. This usually means there is a wider gap in the difference that you owe and what the house actually sales for. What does this mean to you…a higher potential tax liability? Furthermore, the bank may come after you for a Deficiency Judgment. If a short sale is accomplished compared to a foreclosure, there are no guarantees, a successful short sale should eliminate a deficiency judgment, minimize your tax liability, and keep the foreclosure off your credit. President Bush signed law H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007 to help relieve borrowers from getting 1099 and their losses. Losing your house is enough. “On December 20 President Bush signed into law H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007. H.R. 3648 will provide relief from that kind of tax bite in certain specified situations. Beginning January 1, 2007 and lasting until January 1, 2010, certain discharges of mortgage indebtedness on a principal residence will be excluded from a taxpayer's gross income. As always, though, certain restrictions apply. For more information on deficiency judgments and the tax liability you may face based on your current situation, submit your information to me for a free consultation, and as always consult your attorney/tax advisor.” I do work with an Tax and Bankruptcy Attorney locally who will do a free telephone consultation with you.

What is a Deficiency Judgment?
A Deficiency Judgment is the usual result from a lender selling a house at foreclosure auction. The judgment is usually the difference between the amount that was owed on the house (including any fees, taxes, etc...) and the amount received from selling the home.

The Different Options

Reinstatement Plan
The Reinstatement is basically the total amount that is past due including late fees and attorney costs. Paying the past due balances will get your mortgage caught up immediately. There might be a huge amount of past-due fees which could include back payments, late fees and legal expenses. Reinstatement might be accomplished if you can promise a lump-sum to bring your payments to a current status by a specific date.

These funds can come from several sources such as retirement funds, credit cards or insurance policies. These might provide the needed funds to stay secure in your home. Other options include private loans from family or friends. A Reinstatement is the easiest way to solve a foreclosure and secure your home to keep your mortgage company taking it from you.

Repayment Plan
The most common way to bring a loan current is the repayment plan. Many lenders will require that up to 50% of the past due balance is to be paid. While this sounds great, in many cases this is just not possible. After all, if you had 50% of the past due balance, you probably would not be that far behind. We will still need to collect all the documentation but will ask that your lender work with us on obtaining a reasonable amount of money from you to bring your loan current.

This type of solution to your mortgage foreclosure is generally accepted very well by lenders. We will complete a detailed financial portfolio of your income vs. your expenses to show the lender what payment that will work with your current income along with what down payment that you can afford. This will bring your account up to date immediately and keep you secure in your home.

Loan Modification & Restructuring
Many of our clients will find themselves using a Loan Modification Plan to stop foreclosure. If you can currently make your regular payment, but you cannot catch up with the past-due amount you need to contact your lender immmediately.  Some Lenders will agree to roll any past-due amounts, including interest and escrow, into the unpaid principal balance.

If you are unable to make payments at this rate, your lender may extend your loan for a longer period of time, modifying the loan amount to a more affordable level. We have even been successful at lowering the interest rate, thus giving you a lower monthly payment which you can afford.

A Loan Modification will change your existing mortgage note and give you a fresh new start in managing your home. Your account will be brought up to date immediately. You will no longer have the lender calling asking you to pay fees and charges that you simply can not afford.

Federal legislation has provisions for homeowners who negotiate loan modifications with lenders to have the income-tax liability for the amount forgiven waived but you must speak to your tax accountant to determine if this will apply to you.

Loan Refinance
I may be able to arrange new financing. This will depend on your income, credit, value of your home, amount of your equity and your current financial position. However, if you are currently late on your payment this option will likely not be available to you.  

Do you think you cannot get refinanced because of your bad credit? Most people do not realize that even if their credit is bad they can still get refinanced. I look at other things like Equity, the reason your credit is bad, how your current financial situation has changed and your last 12 months of credit history. Sometimes you can improve your credit by disputing inaccurate items in your report.

When is the time to refinance? You need to look seriously at refinancing when you need to lower your payment, when you need some cash, and if you have an Adjustable Rate Mortgage and it is nearing maturity. These scenarios are perfect examples of when and why to refinance.

Loan Forbearance
Loan Forbearance is designed to give people time to gather their assets. During Loan Forbearance, the mortgage company allows you to delay or reduce payments for a short period. This delay does come with a commitment and understanding that another option will be used after the short period to bring your mortgage to a current status. This could delay and even terminate the legal action taken by your lender.

Some lenders may agree to combine your Forbearance with Reinstatement or a Repayment Plan. They will do this if you can bring your account current by a specific date. This plan is most common for people who just experienced a sudden life changing experience such as expense increase or income loss. you will need to provide detailed hardship issues to your lender and work out what is best for you.

Pre-Foreclosure Sale
If you are willing to sell your home I can help you with this by listing the property for you or referring you to a good local agent if you are out of my service area. This may allow you to sell your home and walk away with some money in your pocket, rather than losing it! I work with closely with highly experienced real estate agents and will be available to oversee the transaction.

Deed-in-Lieu of Foreclosure
This option offers several advantages for both you and your mortgage lender. The advantage to you is the immediate release of most or all personal liability associated with the defaulted loan. You do need to speak to your tax accountant about this as there may be tax consequences to this.

A Deed-In-Lieu procedure allows the home owner to give the property voluntarily back to the lender. Often times, the debt or deficiency is forgiven. A Deed-In-Lieu will not save your home, but may be used to avoid a long legal process of foreclosure and increase your chances of getting a loan in the future. Deed-In-Lieu will have a negative affect on your credit. However, it is often a better alternative to a foreclosure.

Deed-In-Lieu will typically require your home being listed with a Real Estate Agent for at least 30 days. In addition, the property must be free and clear from all other liens. Let me help you take the necessary steps should your situation require this option.

SHORT SALES

What is a Short Sale?
A short sale is an agreement with a lender allowing for the sale of a property to a third party for less than the amount owed on the mortgage. Under this agreement, the lender accepts less than the amount owed and releases the borrower from the mortgage, thereby preventing foreclosure... (This would include all excise tax, closing costs, agent commissions, etc.)

When Should I start a Short Sale?
When you realize you can no longer afford the mortgage and cannot sell the property for what you owe on it. The quicker you start the more chance you have. Contact me today to see if you have enough time.

Why would my mortgage company accept a short sale?
That is a simple answer; the short sale can save you mortgage company thousands of dollars. The average savings for the companies range from $10,000 - $60,000. Good reason for lender to do a short sale.

How does a Short Sale and Foreclosure show on my credit?
Foreclosures can show up as a FORECLOSURE. This could report for as long as seven years. Foreclosures will usually have to be disclosed on any new loan applications in the future. A short sale usually reports as a SETTLED DEBT. This could have less impact on your credit, but please consult a credit company for more information.

Why does the process take so long?
The lenders are overwhelmed with borrowers in this same situation. Lenders are processing thousands of files each day. That is why it’s extremely difficult to actually work with the lenders if you do not know the process. It can often take phones calls everyday for weeks just to get a return phone call from your lender's loss mitigation department. We even sometimes sit on hold for one to two hours.

How are non-owner occupied properties affected in a Short Sale?
For short sale negotiations, non-owner occupied properties are handled in the same way as owner occupied properties.

Must there be a hardship to do a Short Sale?
Not necessarily, but having a hardship will have a better chance of doing a short sale.

Why are photos of the home needed?
Your lender relies on us to provide them information. They have no knowledge of any of the home's disrepair without photographs. The old saying "A picture is worth a thousand words" is needed here. Photos of repairs are needed, such as roof and pool repairs should always be taken. Photograph every deficiency in the entire home so the lender has a clear picture of the state the home is in.

Can I short Sale multiple properties?
Yes, but I will still need the short sale packages completely filled out for each property. However, the supporting documentation such as the hardship letter, financial statement, and bank statements can just be reproduced for each package.

What is the Foreclosure time frame?
Usually 90 days past due will trigger the mortgage lender to issue a Notice of Default. Once the NOD is issued, the lender will hire an attorney and begin the Foreclosure process with the court system. This is were the attorney's fees start piling up and getting really expensive. The foreclosure process has a very strict procedure, which is different in each state. If no prevention foreclosure action is taken, eventually the house will be sold at a public auction.