Know Your Options!

There are several choices available to all homeowners who have been financially impacted by the poor economy and today’s declining real estate market.

Short Refinancing

This option allows you to stay in your home and refinance to remedy the negative financial impact on a homeowner. If you want to stay in their home, and the lender is willing to reduce the loan balance it could be a great option, but it is important to be current on your payments.

Loan Modification

Loan Modification allows you to work with your existing lender to stay in your home and recast the financial terms of your note. Unfortunately, over 90% of all American Homeowners do not qualify for loan modification, but if you do qualify this is a great option. The critical issue is successfully negotiating with your lender and reducing the principle balance to be in line with the homeowner’s value decline. Many lenders will only work with homeowners if they are delinquent, which can be a bad idea for stronger owner.

Bankruptcy

Personal bankruptcy is an option that millions of Americans have used to eliminate unmanageable debts, or stop home foreclosure. There are two types; Chapter 7 and 13; a Bankruptcy Attorney will advise you on which of these two options are right for you personally. Obviously, A B/K on your credit history for 7 years has a very negative impact on auto loans, credit cards, renting and or purchasing a property. We urge you to weigh all factors carefully.

Deed in Lieu

A Deed in Lieu of Foreclosure may be the fastest way out from an underwater home. This may be an option if there is only one loan on the property or the same lender and investor holds both the 1st and 2nd mortgage. Banks are willing to offer this solution as it is to their advantage, saving the bank time and money, however does not provide you with additional savings and time in the property. Credit impact is only slightly less damaging than that of a foreclosure.

Foreclosure

There are two types of foreclosures in California; Judicial and Non-Judicial. Almost all lenders opt to utilize the non-judicial method because it is faster and less costly. The Lender only gets to select one approach, which is the trustee power of sale method or non-judicial. It is a much faster remedy for the Beneficiary. A Foreclosure on the borrowers record has a much higher impact on their ability to own a home in the near future. Many delinquent homeowners were collaterally damaged by this economy and say, “We don’t think we will be buying another home right away.” Are they planning a buying a car, cashing a check, having a credit card or applying for a job? All are impacted by a poor credit report and must be considered.

Short Sale

This option allows you to protect your creditworthiness and still sell your home and get out from under the tremendous financial pressure homeowners typically experience. This is called a “Short Pay” and is probably the best option for almost all underwater home sellers. Your bank in most cases will pay late property taxes. Your bank will also pay the standard closing costs as well as your Real Estate Agents commissions. You can even Short Sale your underwater home while being absolutely current on your mortgage payments.

General Definition and Brief Overview of The Short Sale also known as a Short Pay:

A Short Sale occurs when the proceeds from the sale of a property are not sufficient to pay off the lender (or lenders) of record in full. The lender (or lenders), upon review of the purchase agreement escrow instructions, estimated closing statement, appraisal and other additional documentation the lender might require, may agree to accept a pay-off that is less than the amount actually owed, short pay. The seller will net zero proceeds. (New Government HAFA guidelines, pay the homeowner $3,000. Discussed later.) All proceeds, less usual costs and expenses as approved by the lender will be paid to the lender at close of escrow. All Real Estate Agents Commissions are paid by the Bank, not you the seller.