CalHomeResearch

What if you owe more than your house is even worth? This is called being Up-side down or Underwater. There are many homeowners in this situation and you’re not alone. In today’s market of high foreclosures and credit rejection, everyday more and more people are thinking the same thing as you: “What should I do?”

There are a couple different types of people out there currently.

1. The person who just flat out can’t afford the payment anymore due to layoff, divorce, adjusted interest rate and higher payment, illness, etc…
2. The person who can afford to make the payment, but decides not to because they owe more than their house is worth and are Underwater.

No matter which category you fall into, you have some options.   We all have different reasons for falling on hard times and they not only affect you, but many others as well. We feel it is important to understand your options and to work with California Market Specialists, like ourselves, who can provide you the information you need to make the best decision.  A good decision that takes into account your credit future.

If you are in the first category of not being able to afford your payments anymore, there are a few things to try.  Some of them may work and some may not, but you will need to try all of them to better your situation.

1. One option is to try and make your payment afford you. This has been under the radar to the average person and can be of significant help to someone in trouble. What does this involve? Well you would have to get the bank to make your home affordable. We know this is a difficult task, but there are some banks that are helping. This would be through a Loan Modification.  This would entail the bank negotiating with you to lower your interest rate, extend your ARM, convert your adjustable to a fix rate, lower your payment, work out a payment plan, or in some cases reduce the principle balance. Sounds great doesn’t it?  Well, sounds great, but may be very difficult to obtain.  The questions, forms, documentation can be overwhelming.  It appears that the number of homeowners obtain loan modifications is becoming less and less.
2. The other option is to Short Sale your home.  You would need to receive a fair market value offer for your home and submit this offer with a perfect Short Sale Package to your Lender(s) for approval.  A successful Short Sale requires expertise, experience and the ability to obtain a quick quality offer on your property. 

If you are asking why would any bank approve a Short Sale? The answer is that it can cost tens of thousands of dollars may be more for the bank to foreclose. They want to avoid this at all costs, even if they don’t seem to want to cooperate. What is ridiculous in our opinion, is that some banks (not all) won’t speak with you until you have missed a payment.  In dealing with Banks/Lenders many people get very confused and frustrated.   Getting a hold the right person,  the same person you originally spoke with, or waiting for an answer could be nothing short of frustrating.   In trying to figure out your options with a Mortgage Relief solution, a professional working on your behalf to negotiate with the Lender(s) is the best scenario.  As mentioned earlier, just the paperwork and documentation alone are overwhelming.

The second type of person who can afford it, yet are thinking of cutting your losses, and letting the home FORECLOSURE.

• The main issue is minimizing credit damage!  With a foreclosure lasting on your credit from 7-10 years, some lenders aren’t willing to give you a loan for the next 7 years. That can hurt more than a home loan. With a lower score and more guidelines everyday, you may not be able to obtain a car, credit card, personal line of credit, etc… Creditors/Lenders find it hard to extend credit to someone who did nothing for months and let a home foreclose.

If you are in this boat, you need to seek the advice of professionals and look at all your options! This will be within your best interest in the future.

In conclusion, if we try to avoid letting our homes go into foreclosure, we can hopefully better the situation of our economy in the long run. This not only will benefit you, but our economy as well. These are challenging times and the best thing to do is to weigh all your options. You need to be as proactive as possible and find professionals to help you. Trust us, if you do nothing, someone will do it for you and you may not like the consequences that go with that. Be a part of the solution and fight for your credit!

The Short Sale Option Q&A

So What exactly is a “Short Sale” that everyone is talking about?

A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy the loan.

The best part, the existing lender pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off, you avoid foreclosure and you minimize the damage to your credit.

Is a Short Sale right for me?

Mortgage lenders are increasingly willing to work with borrowers faced with a financial hardship to accept a discounted payoff on a mortgage. If you are faced with a hardship that makes it likely you will no longer be able to meet the obligation on your mortgage, your lender would prefer to settle the matter with you as opposed to taking the property through a foreclosure.

As you consider the option of a Short Sale, remember your lender is looking to limit any potential loss on your loan. By completing a Short Sale, your lender has arrived at a solution that is better than a foreclosure.

Bottom line, your lender really does not want to take your home back, but wants to work with you.

If I do a Short Sale, how much will I have to pay to sell my home?

The great news is Nothing. It’s true, in most cases; it will cost you nothing if your lender approves the Short Sale. All commissions, title and escrow fees, and even most repair expenses are paid by the lender as part of the Short Sale approval. Remember, lenders approve Short Sales and accept the resulting loss in an effort to avoid bigger losses through foreclosure.

Can I simply deed my property to someone else and avoid the hassle?

Deeding your property to someone without paying off the loan yourself is almost always a bad idea. In the first place, the lender still considers you primarily responsible for the payment and loan balance. If loan payments do not get paid, or if the lender ultimately forecloses, this will show negatively on your credit report.

Secondly, when you deed your property to someone else, you give up control of the property. Along with the deed goes the ability to control the property and consequences you may be faced with.

Do not deed your property to someone else without paying off the loan, unless you have consulted with an attorney.

How do I get started on a Short Sale?

It’s easy. First and foremost, as California Market Specialist we review all your options. Again, at no charge to you, we are able to identify your circumstances and hardship which will pre-qualify you for the Short Sale process. Ultimately, it is your Lending Institution which grants the final approval. The best way to get you started is through a telephone conversation to review your situation and then through an appointment. Again, this is at no cost to you.

What sort of hardship would my lender consider legitimate?

To some extent, that will depend upon the mortgage company considering the Short Sale request. Generally, if the hardship is real and the mortgage company believes the loan is likely to become delinquent as a result, the Short Sale request will be processed by the Loss Mitigation Department. A big key to getting Loss Mitigation to accept a hardship is to submit a strong hardship letter. The hardship letter sets the tone for the entire file.

Below you will find a list of “hardships” that are common and frequently accepted by mortgage lenders.

• Significant Family illness or injury
• Illness or injury in the extended family – particularly if it forces relocation
• Job relocation when the property is equity deficient
• Job loss or significant income loss
• Divorce or split of domestic partners
• Adjustment in mortgage payment or unforeseen increase in living expenses

I am current on my mortgage, will my lender consider a Short Sale?

The answer is, maybe. Some lenders will accept a Short Sale request for approval on loans that are not delinquent. Other lenders will not accept the file until the loan is delinquent. We can put your Short Sale package together rather quickly and submit it for approval.

Do lenders approve all Short Sales?

In a word, no. That is why it is critical to work with someone that has extensive experience at getting Short Sales approved.

From the presentation of the Short Sale package to the lender, to working with the lenders Loss Mitigation Department, we know how to keep the file moving towards approval.

The first step is to get pre-qualified for a Short Sale. There is no charge for this, and it’s easy. All you need to do is contact us or give us a call.

Getting a Short Sale Approved

Working with lenders to get short sales approved is what we do every day. We know the importance of getting started on the right foot with the lender’s loss mitigation department. We have learned many times over that being prepared and maintaining our professionalism are critical to getting short sale approval.

The Lender Wants a Great File…

And from us that is just what they will get. We have one opportunity to impress the lender with a strong, complete and well organized file. That initial step will go a long way towards determining the lender’s position on approving your file.

Lenders do not want to acquire properties through foreclosure, but they will not approve just any short sale. When your short sale file is submitted to your lender for approval we will map out a plan for approval that will have the lender feeling positive about approving the short sale.

Putting emotions aside, it can be a win-win-win!

It is NOT often in real estate transactions that virtually all parties with a financial interest can be winners in the same transaction. A successful Short Sale is one of those rare situations where everyone wins.

The Buyer Wins by acquiring a property at below market price. While some Short Sales will be bigger bargains than others, nearly all Short Sales will represent a good deal for the buyer.

The Seller Wins by avoiding foreclosure and all the credit damage that goes along with it. The property gets sold, all the loans get paid off and the existing lender pays all the sales costs. In most cases the Seller has no out-of-pocket expenses.

The Mortgage Holder Wins by reducing the loss they absorb to get the delinquent loan off their books. Mortgage companies know that the costs associated with acquiring a property through foreclosure. To resell the property the mortgage company frequently needs to invest money for clean up/repairs, staff to manage and maintain the property as well. This is precisely why they have set up Loss Mitigation Departments to resolve delinquent mortgages before the foreclosure is complete.

The Foreclosure Option

Yikes!

At any rate, a foreclosure should be avoided. Again, this is quite damaging to your credit, to the surrounding homes in your community, and to the economy. As California Market Specialists, we do all we can to help you avoid a foreclosure.