As a result of changing real estate market conditions and rising mortgage payments, many homeowners have been left feeling stressed, confused and forced to make tough decisions regarding their home. A "Short Sale" is when the amount you sell your home for, is less than the outstanding loan (secured liens) owed on the property. Short selling your home is a very difficult and lengthy process and should be discussed in length with family and a professional. When you are unable to meet your mortgage payment obligations, the secured liens are forgiven by the bank as they move to accept less via "short sale." A "short sale" doesn't necessarily relieve the homeowner of that financial obligation (see California legislation). If you are successful, the difference between what you sell the house for and what you owe on the house may be forgiven. Also, if caught in time you may be able to avoid foreclosure.




Is a Short Sale Better Than a Foreclosure?
Some say a "short sale" seems more honorable than a foreclosure. In a foreclosure, the bank gets the home instead of money. In a short sale, the bank gets some money but not the home. So, preventing a foreclosure with a short sale is a bit of a gamble as there are no guarantees that there will be an offer from a "qualified buyer", that the lender will approve the application for "short sale" or that the home will sell. Short sales are a methodical process and reap benefit if timed perfectly. There have also been cases where the home being offered as a short sale ends up being a bank owned property even with offers in on it. Therefore, its a case by case scenario!


Do You Foresee Falling Behind On Your Mortgage Payments?
If so, sit down immediately and develop a "Financial Plan!" Mortgage costs including taxes and insurance should be no more than 28% of your net income (take home pay). If not, develop a "revised budget", contact your lender for alternatives and way the options of keeping the property or re-establishing yourself elsewhere. The market is flooded with desperate homeowners who struggle to make their mortgage payments on a monthly basis. Change is okay, develop a plan, work hard and stay focused!

 

Do You Owe More Then Your Home Is Worth?
If so, DO NOT DO A LOAN MODIFICATION! Instead, sit down FIRST and analyze your financial situation and determine first of all where you can cut back and create a stricter budget moving forward. Determine a short term and a long term goal. Let's face it home values will never be the same again unless you're looking into my 10 year crystal ball (everything is cyclical). Therefore, unless you win the lotto or have resources to double your payments, then contact your lender and see what options you have besides a loan modification. There are special programs if your loan is Fannie or Freddie Owned otherwise, a loan modification is like putting a "Band Aid over a Bullet Wound"..its only going to last for so long if at all! The most vulnerable are those who bought their homes between 2005 & 2011 and now need to sell due to unemployment, life change, special needs or medical hardship. Prices in some places are notably lower then they were at the peak of the market so consider a "short sale" and way the options. DON'T DELAY THE INEVITABLE!


Have You Just Received An (NOD) Notice of Default?
If so, act quickly for you have a very short window of time to salvage or remain in control of your property. Get started immediately in communicating with your lender about the process and what your options are. Take detailed notes of who you spoke to along with dates and times in the event you need to represent yourself in the court of law. If a solution isn't reasonably possible, then start planning your relocation.  The longer you wait, the worse it will get. Moving forward, develop a plan, work hard and stay in control!