It seems that everyday we are hearing more and more news about the economy and the uncertainty of the housing market. If you are behind on your mortgage payments, this is an excellent time to negotiate with your lender. The banks don't want your house. They will try to work out a repayment plan but you must be able to show that you can pay the monthly payment. Unfortunately, many times, the circumstances that caused homeowners to fall behind on the payment is a loss of job, medical conditions, divorce, or other problems that can't be resolved immediately.
If you are in this position and don't see a way out, call us. We have helped many homeowners to negotiate payment plans or modify their current mortgage. The solution depends on your current situation.
We have heard that as much as 50% of the homeowners that get foreclosed have never contacted their mortgage company to work out a solution. It is distressing to feel that you can't overcome the problem, so many people just try to ignore it.
A foreclosure will take about 5 years to come off your credit report, but a short sale only affects your credit for about 2 years. Either way, you'll have to move. If you can start to work toward the future, planning a new start in a couple of years, that is certainly a better option than foreclosure.
Don't give up without at least knowing the options. Call me at 706-296-4395. I have experience in negotiating with the lenders and have all the forms that need to be completed to process a short sale.
The banks can be very difficult to deal with, especially when you're in a desperate situation. I am willing to help negotiation your current loan at no charge. If we decide that a short sale is your best option, there is still no charge to you. The real estate commission is negotiated with the bank after we get an offer on your home. A short sale means that the bank agrees to accept less than is owed on the mortgage.
2 comments:
Jerri, Is there anywhwere that you could look for the back up on the time it takes for a foreclosure to come off your credit, or a shortsale? I would like to able support those ideas without any liability. It make sense that they would be dealt differerntly but can we get anything to show it?
Thanks for your thoughts.
Richard, It seems that everyone has different numbers but all seem to agree that the short sale is better on the owners credit in the long run. Here is something I found doing a quick search on Google. The information I got was verbal from a company I work with doing loan negotiations for homeowners getting close to foreclosure.
According to David Steep, division manager at Vitek Mortgage, sellers will take a bigger hit on their credit report by going through foreclosure or giving the lender a deed-in-lieu of foreclosure. Steep says the points lost on a FICO score are as follows:
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Foreclosure or Deed-in-Lieu of Foreclosure Both of these solutions affect credit the same. Sellers will take a hit of 250 to 280 points. This means if a seller's FICO score before foreclosure was 680, it could dip as low as 400.
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Short Sale The affect of a short sale on a seller's credit report is much less damaging. The ding on credit will show up as a pre-foreclosure in redemption status, Steep says, which will result in a loss of 80 to 100 points. This means a short sale with a previous FICO of 680 will see it fall to 580 to 600.
Waiting Period Before Buying Another Home
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Foreclosure or Deed-in-Lieu of Foreclosure Steep says a seller who wants to buy another home after foreclosure will end up waiting about 36 months before a lender will offer any kind of interest rate that makes sense.
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Short Sale The good news for short sale sellers is the wait is much shorter before buying another home. "They can buy again in about 18 months at a good interest rate," says Steep.
Short Sale / Foreclosure Deficiency Judgments
The bad news is a seller could be subject to a deficiency judgment for the difference between the loan amount and the amount paid. In California, purchase money loans are not subject to deficiency judgments; however, hard money loans, equity loans and refinances are. Other states have laws regarding personal guarantees, which could also result in a deficiency judgment if the home owner is personally liable for loan repayment.
The lender has sole discretion whether to pursue a deficiency judgment in those instances when the judgment is permitted. To determine whether a pending foreclosure or short sale is subject to a deficiency judgment, talk to a real estate lawyer.
If you're a seller trying to decide whether to let a home go through foreclosure versus attempting a short sale, salvaging your credit is the main advantage to doing a short sale. But seek legal and tax advice before making that decision.
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