Across the country, the challenging housing market and some tough financial times have left many homeowners in jeopardy of losing their homes. For a lot of them it's turned the American Dream into the American Nightmare. This is a potentially devastating event that can often be avoided and it's important for owners in this position to know that they do have choices. We are happy to do all we can to point you in the right direction for information and help. We have our Certified Distress Property Expert (CDPE) designation and have helped many families in financial distress move forward.
Of course the right course of action will depend on each person's individual circumstances. Here are some of the many different options we can help you explore:
One of the first questions we ask people in this situation is whether you have tried to contact your lender to see if they will work with you to arrange a refinance, a mortgage modification or a repayment plan. For most owners in trouble, refinancing is difficult because the value of their home has fallen below an acceptable loan-to-value ratio. However, talking with your lender is still the first place to start. Before calling, have your loan account number and recent income and monthly expense information available and be ready to briefly explain your current situation. If you would like to call a HUD-approved housing counselor their number is (800) 569-4287. Visit the U.S. Department of Housing and Urban Development's website for some good info.
If you are a member of the military you may be eligible for the Homeowners Assistance Program (HAP). Although specific requirements must be met, you may qualify for up to 95% of the appraised fair market value of your home if you sell it. Or you could sell your home directly to the government and receive up to 75% of the value of the outstanding mortgage. There are also potential benefits available if foreclosure has already begun. Take a look at the HAP website for the full scoop. Tom & Cindy have recently helped sell the homes of a number of clients that qualified under the HAP Program. Our most recent sale under the Program confirms that the government has streamlined the process quite a bit since HAP's inception. If you qualify, it could be a godsend.
As yet another option, we can also discuss the possibility of renting your property. Some people have a well-located property that can generate enough rent that any negative monthly cash flow is manageable enough that they can afford to hold the property and wait until the market improves to ultimately sell.
Believe it or not there are actually folks facing foreclosure with enough equity in their home to sell and break-even or even walk away with some cash but don't and wind up losing their home to foreclosure. Often this is due to health issues, divorce, a job loss or other dramatic event that pre-occupies their time, effort and energies. We have a long history of helping people through these types of events and it is easy for us to give you an accurate idea of the current market value of your home and what you might net if you choose to sell.
Perhaps you've heard of the term "short sale". This is where an owner owes more on their house than it is currently worth. The bank agrees to accept less for the property than what is owed in part because it would cost them more to foreclose. Several things have to happen for a bank to approve a short sale. The first and most important is that the borrower must prove that they have a financial hardship. This hardship must be a material negative change in their financial position between the time they purchased the home and the date of the short sale. Some acceptable hardships are job loss, payment increase, divorce, excessive debt, and unplanned relocation among others.
Under this scenario, having a qualified Realtor with years of experience in short sales is key to marketing your home and negotiating with both buyers and the bank. This can be an extended process and requires a combination of patience and tenacity. A successful short sale benefits the homeowner in that they've kept a foreclosure off the public record and kept some of their credit rating. Additionally, in some cases the bank will allow the homeowner to avoid a deficiency judgment. The borrower may even qualify for another mortgage in as little as 24 months, compared to 5 years for a foreclosure.
There is a lot of misinformation out there about short sales. Some agents won't deal with them and say they are impossible. That is far from the truth. We have undergone extensive training in helping homeowners in distress and in processing short sales. The CDPE membership organization is a national group of agents who receive thousands of short sale approvals each month. Again, without further details about your specific case, we can't give you any guarantees, but there are more and more short sales being approved every day and it may be an appropriate option to look at.
In summary, there are many options available to homeowners who are facing foreclosure other then just letting it happen. Tom & Cindy have the experience, expertise and willingness to work through those options and to help you through this difficult time!