Foreclosure Prevention, Short Sales, Loan Modifications...
Getting behind on Mortgage Payments can be scary and into an uncharted area for most home owners but there are things that can be done. The main thing is not to ignore the notices sent by your Lender/Loan Servicer - reach out to them and see what options they have to work with you on getting caught up on your Loan. Most offer some type of Loan Modification Program to assist their home owners when they find themselves in difficult times. Remember to use caution when they are offering you work out programs and read that small print to make sure you fully understand what they are offering you. If you don't understand ask them to explain it or call a professional who can help navigate you through the terms before you sign anything.
Loan Modification: Lender will work with you through a Program to help you get caught up on the payment, make adjustments to your current loan and sometimes the missed payments can be put at the end of your loan. Your Lender will determine if you qualify for their Program by reviewing your Financials which you will submit to them when requesting the Modification.
Short Sale: Realtor will List your home For Sale at a fair market price to secure a Buyer for the home and a full Short Sale Package is submitted to your Lenders Short Sale Department for review and approval. The Short Sale Package consists of: Lender Required Documents for Short Sale, 3rd Party Authorization which allows your Agent to talk directly with Lender, Offer to Purchase and Your Financial Documents. Once submitted it can take a couple of days for it to be processed to a Negotiator that will be able to discuss what else they may need, what their procedures are and their timelines for responses. Keep in mind the only thing Short about a Short Sale is what the Lender is going to accept Short of what you Owe on the Loan. A Short Sale will affect your credit and in most cases prevent you from buying another home for several years.
Foreclosure: The Lender normally begins the Foreclosure Procedure when you miss the 3rd Mortgage Payment if you are not talking with them trying to work out some arrangement. Most Lenders have options on the type of Foreclosure:
1. what we call Cash For Keys where they reach an agreement with you on when you will be moved out by, the condition you are to leave the home in, you signing the Deed to the home over to them and they sometimes provide assistance funds to help you get moved out of the home.
2. being a Full Legal Foreclosure where they proceed with a formal court process to regain full ownership of the home. Legal Foreclosure will give you the opportunity to get the missed payments caught up in a lump sum prior to the Foreclosure Date which is provided to you with the amount needed to stop the Foreclosure. The Lender sets the sales price of your home and is mainly looking for what is owed on your loan. Once the Lender has done Legal Foreclosure they will begin the Eviction if you haven't already moved out of the home.
For Short Sales & Foreclosure 1 and 2 we highly recommend you talk with an Attorney about the ramifications of these on your Credit. An experience agent can provide you the basic information on this but will recommend you speak with an Attorney.
Today there may still be another option:
List/Sell: Many home owners who are behind on their payments due to unexpected financial hardships and/or caused by Covid may have equity in their home and have a chance to help themselves. If you have equity in your home and can't get caught up on the missed payments it would make sense to List, Sell, Close on your home and take your equity you have to work on your financial hardship. This way you get your money, work to get yourself financially straight again, restore your credit scores and then you can purchase a home without your credit being affected by a Short Sale or Foreclosure.
Loan Modification: Lender will work with you through a Program to help you get caught up on the payment, make adjustments to your current loan and sometimes the missed payments can be put at the end of your loan. Your Lender will determine if you qualify for their Program by reviewing your Financials which you will submit to them when requesting the Modification.
Short Sale: Realtor will List your home For Sale at a fair market price to secure a Buyer for the home and a full Short Sale Package is submitted to your Lenders Short Sale Department for review and approval. The Short Sale Package consists of: Lender Required Documents for Short Sale, 3rd Party Authorization which allows your Agent to talk directly with Lender, Offer to Purchase and Your Financial Documents. Once submitted it can take a couple of days for it to be processed to a Negotiator that will be able to discuss what else they may need, what their procedures are and their timelines for responses. Keep in mind the only thing Short about a Short Sale is what the Lender is going to accept Short of what you Owe on the Loan. A Short Sale will affect your credit and in most cases prevent you from buying another home for several years.
Foreclosure: The Lender normally begins the Foreclosure Procedure when you miss the 3rd Mortgage Payment if you are not talking with them trying to work out some arrangement. Most Lenders have options on the type of Foreclosure:
1. what we call Cash For Keys where they reach an agreement with you on when you will be moved out by, the condition you are to leave the home in, you signing the Deed to the home over to them and they sometimes provide assistance funds to help you get moved out of the home.
2. being a Full Legal Foreclosure where they proceed with a formal court process to regain full ownership of the home. Legal Foreclosure will give you the opportunity to get the missed payments caught up in a lump sum prior to the Foreclosure Date which is provided to you with the amount needed to stop the Foreclosure. The Lender sets the sales price of your home and is mainly looking for what is owed on your loan. Once the Lender has done Legal Foreclosure they will begin the Eviction if you haven't already moved out of the home.
For Short Sales & Foreclosure 1 and 2 we highly recommend you talk with an Attorney about the ramifications of these on your Credit. An experience agent can provide you the basic information on this but will recommend you speak with an Attorney.
Today there may still be another option:
List/Sell: Many home owners who are behind on their payments due to unexpected financial hardships and/or caused by Covid may have equity in their home and have a chance to help themselves. If you have equity in your home and can't get caught up on the missed payments it would make sense to List, Sell, Close on your home and take your equity you have to work on your financial hardship. This way you get your money, work to get yourself financially straight again, restore your credit scores and then you can purchase a home without your credit being affected by a Short Sale or Foreclosure.
Disclosure: Elizabeth is a Licensed REALTOR and Real Estate Broker in the Commonwealth of Virginia
Site Updated 8.29.24
Elizabeth is not an Attorney and can not provide Legal Advice. It is strongly suggested that anyone considering a Short Sale or Foreclosure also consult with an Attorney for legal advice.
Elizabeth is not an Attorney and can not provide Legal Advice. It is strongly suggested that anyone considering a Short Sale or Foreclosure also consult with an Attorney for legal advice.
