Investigate Options, Possible Solutions.

 

A LENDER'S OPTIONS UPON LOAN DEFAULT

The type of property will determine what remedies a a lender may have if you are in default on your payments. 

 

BEWARE OF SCAMS

If you qualify for a short sale use a professional that is educated about the process, has experience and can offer the most assistance to you. Beware of scammers and fraud! 

 

FREE HUD COUNSELING

At at time when you are short money, there is actually FREE counseling available through HUD. They can advise on options and contact your lender on your behalf. Phone: 888-995HOPE staffed by HUD approved credit counselors.

 

THE IMPORTANCE OF LEGAL ADVICE

You should consult an attorney.  The legal issues are complex and some carry strong consequences.

 

THE IMPORTANCE OF TAX ADVICE

Talk to an accountant about your tax liability for potential debt forgiveness

 

DON'T TRASH THE HOUSE

If you remove everything nailed down and trash the house you may sustain more legal headaches.  Real property is attached property and it should remain. 

 

OPTIONS OTHER THAN SHORT SALE

  • Talk to your lender about a loan workout wherein the lender agrees to a reinstatement plan.
  • Will your lender MODIFY the loan for you?  This would entail changing some of the terms of the loan.
  • Refinance may be a possibility pending your loan balance and current value of property
  • Deed in Lieu - talk to your legal source on this one
  • Work Out Sale - The lender may allow a specific time allocation for you to sell your property and pay off the loan.
  • Bankruptcy - talke to legal source
  • Foreclosure - the hit to your credit is a biggie so carefully determine if it is your best option

 

SHORT SALE - Is it right for you?

Find a qualified real estate professional. Look for designations.

CDRS,(Certified Default Resolution Specialist)  SFR (Short Sale Foreclosure Resource) are designations that show the agent has undertaken extensive education to better help clients in this process.

  1. Documentation/criteria for a short sale will be different for each lender. Investigate what is required. The process will vary pending the type of loan that you obtained. This process will take more paperwork than what it took to get the loan. Be prepared! Keep copies as duplicates may be needed. 
  2. Determine the amount owed as all debt, costs, interest, legal fees must be factored into the sale.
  3. Determine today's value of the property. The seller must prove to the lender that the property is worth less now than when purchased.
  4. The borrower must prove that they are experiencing hardship. (Loss of equity alone is not considered hardship). 

This article is intended to help educate, increase awareness about options. Act before you leap. See the attorney first and get his/her advise. Time is not on your side if you are considering any of these options.