Say you need to sell your home, but the balance on your mortgage is greater than the amount that the home will sell for in today’s marketplace.

As an example:  If your mortgage is $500,000, but your home is worth $450,000, you are $50,000 short. You will need to get find ready, willing and able buyer to make an offer on the property, and then get the lender to accept the offer.

Before you do anything, I’d suggest that you contact an experienced Real Estate Lawyer, and Accountant to discuss your situation, review your finances and to be sure that you fully understand the pros and cons of Short Selling your home.  Your Realtor is not qualified to give you advice regarding legal or tax issues, neither is your best friend, nor is your neighbor. You need professional advice.

Here’s the process:

• You hire a Realtor who Specializes in Short Sales to sell the property.
• Your Realtor lists the property and makes it known publicly that you can accept an offer on the property, but the Lender has final approval.  If the lender agrees to the price, the house is sold.  If the lender disagrees to the price, no sale.
• You will need to demonstrate to your Lender that you made every effort to advertise, market, and price the property to get the “highest and best” price in today’s marketplace.
• You get an offer from a qualified Buyer, and you accept the offer.
• Your Realtor sends the offer to the Lender along with all of their required documentation.
• Your Lender reviews the offer and determines that they can accept the offer, (or not)
• If the offer is accepted, the transaction closes escrow and the new buyer receives title to the property.

Of course, it’s not that simple, but basically, that’s how it goes.

Everybody doesn’t qualify for a Short Sale.

You’ll need to submit a letter to your Lender that explains that you are experiencing a “Hardship” that prohibits you from meeting their obligations.

Hardships would include: Medical Emergency, Divorce, Bankruptcy, Loss of Employment, Relocation of Employment or Death.

Your lender is going to ask you to provide tax returns, bank statements and financial reports to prove your financial situation.

Once your Realtor has submitted the offer to the Lender, along with all of the required documentation, you need to be patient, because it could take some time before you get a response.

If you are lucky, your Lender responds quickly and the sale goes through.  If the Lender takes too long, your Buyer may buy something else or just change their mind.  In which case, you need to get another offer from another ready, willing and able buyer and start again.

In my opinion, the biggest mistakes that many Sellers make when they are selling a Short Sale property that they forget that if they don’t make every effort to get the best price for their home, the bank may not approve it, and the next step could be foreclosure.

GET THE HOUSE READY TO SELL! You need to box up your personal belongings, declutter closets and cabinets, remove unnecessary furniture, and manicure the grounds.. clean, clean, clean!  You may not want to,or need to spend any money, but you do need to do everything in your power to get a bank approval for your Short Sale with the first offer.

PRICE THE HOUSE TO SELL! Price it to high and it will just sit on the market and you won’t get offers. Price it to low and Buyers will drive the price down because they will assume something is wrong with the property. Even though you won’t participate in the proceeds from the sale, you want to price your home to sell at a price that your Lender will accept.

If you have any questions about the short sale process or would like to know how much your home would sell for in today’s marketplace, just give me a call at 805-3000936 or visit my website www.DebbieSoden.com.

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The current U.S. housing market and national financial crisis has caused untold stress and heartache for many American families. Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to Ventura County area residents for foreclosure are many. Following is a brief explanation of these solutions, including their benefits and drawbacks:

Reinstatement
A reinstatement is the simplest solution for a foreclosure; however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender’s approval and will ‘reinstate’ a mortgage up to the day before the final foreclosure sale.

• Benefit: Does not require the mortgage company or lender’s approval.
• Drawback: Requires that a homeowner be able to pay all back payments, fines and fees.

Forbearance or Repayment Plan
A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

• Benefit: Allows the homeowner to make back payments over time.
• Drawback: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Some mortgage companies will require a homeowner to ‘qualify’ for forbearance.

Mortgage Modification
A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage.

• Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan
• Drawback: Requires that a homeowner ‘qualify’ for the new payment and will often require full documentation. Lender has to be actively pursuing modifications.

Rent the Property
A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, is able to convert their property to a rental and use the rental income to pay the mortgage.

• Benefit: Allows homeowner to keep property indefinitely.
• Drawback: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.

Deed in Lieu of Foreclosure
Also known as a ‘friendly foreclosure’, a deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

• Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
• Drawback: Requires that a homeowner vacate the property, and a deed in lieu may be reported to credit bureaus as a foreclosure.

Bankruptcy
Many have considered and marketed bankruptcy as a ‘foreclosure solution,’ but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

• Benefit: Does not require lender approval.
• Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven years.

Refinance
If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

• Benefit: In some cases, this will lower payments.
• Drawback: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process.

Service members Civil Relief Act (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Service members Civil Relief Act. The American Bar Association has a network of attorneys that will work with service members in relation to qualifying for this relief.

• Benefit: If qualified, this will lower payments on all consumer debt in addition to mortgage payments.
• Drawback: Must be active military to qualify.

Sell the Property
Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

• Benefit: Allows homeowner to avoid foreclosure and harvest some of their equity.
• Drawback: In many cases today, homeowners do not have sufficient equity to sell their property without negotiating a short sale (see next solution).

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

• Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure).
• Drawback: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Please call me today for a free confidential evaluation of your individual situation, property value, and possible options.

If you are looking or guidance and informtion on how to get a loan modification and avoid foreclosure, check out these websites, or give me a call at 805-300-0936.

govt loan modification program

government loan remodification

loan modification mortgage

loan modification fannie may