Are you like many homeowners who are finding it impossible to pay the mortgage, or who see a problem looming with a substantial increase in repayments as the mortgage rate re-sets? You may have borrowed unwisely, or perhaps you have just been unlucky with reduced income through losing
a job, health problems, or other reasons.
You may be quite prepared to sell your home to solve the problem, but can't do so because the home's value is less than the amount you owe. You are "upside down" on your mortgage.
Most homeowners in this position think that foreclosure is inevitable, and the only possible outcome. That is not the case.
There are several reasons why you should try to avoid foreclosure if at all possible . . . not only does a foreclosure do long term and substantial damage to your credit, but a foreclosure on your credit history can affect present and future employment, and security clearances even at lower levels.
If you are in this position and facing foreclosure, don't assume that there is no alternative. The sooner you act, the greater the chance of working out a way forward.
There are two main options available, but please note that they both require that you are genuinely suffering hardship and do not have the means to rectify the situation from your own resources.
CARE: please be very wary of scams where an organization promises to help you with a mortgage modification or a short sale in exchange for up-front or ongoing fees. You should NOT pay anyone up-front for this.
Could Mortgage Modification Work for You?
If you have no plan or need to relocate from your home, and reducing your mortgage payments by up to a few $100's will resolve your problems, then approach your mortgage lender to ask for your mortgage to be modified by restructuring at lower interest rates or providing other temporary or longer-term relief. Lenders are increasingly aware of the benefits of helping to prevent foreclosure if they see the opportunity. Of course, the proposal must be viable.
However, be aware that applying for a modification of your mortgage may take some time, and may not have a sufficient impact on your monthly payments to resolve your overall problem if it is significant.
The interest rate and/or the repayment structure may be modified, but the principal (the total balance owed) is unlikely to change. And of course, if your circumstances mean that your home needs to be sold, then mortgage modification is not a solution.
Short Sale - a Dignified Solution
A short sale is the sale of a home where the net proceeds are insufficient to clear the mortgage(s), and the owner is unable to make up the shortfall from his own resources. Provided the owner is able to show appropriate hardship, with the demonstrated need to sell, the mortgage lender approves the sale contract and allows the sale to go through.
While hardship will often include the inability to make the mortgage payments, this is not always going to be the case. The need to sell (but without having the resources to make good a shortfall) may involve such things as enforced job relocation, divorce, health reasons, and so on, and I have successfully negotiated several short sales where affording the mortgage payments was not, in itself, the problem..
So a short sale offers a dignified solution to a homeowner's financial crisis. While a short sale will affect your credit, the impact is significantly less and for a shorter period than a foreclosure, and should not affect employment or security clearance issues.
Mortgage lenders are co-operative towards short sales, because if the only alternative is foreclosure, there are several reasons why they will lose less and benefit more from an agreed and structured short sale.
As a homeowner who is considering a short sale, the most important thing is to talk it through with a Realtor who fully understands the process and the pitfalls to avoid, as poor handling of a short sale can make a difficult situation even worse. That means working with a Realtor who:-
- is properly trained in short sales
- remains up to date with the latest developments
- remains pro-active throughout the process
My CDPE Qualification
I have undertaken specialized training in the issues surrounding distressed property ownership, and have been granted the CDPE designation (Certified Distressed Property Expert).
The complex world of short sales is constantly changing and evolving, and as a CDPE member I stay very close to this fast-moving area of real estate, enabling me to give the best and most current advice.
As a result, I am very well placed to advise you and help you through these difficult times. I encourage you to contact me to let me help you without delay - it is never too early to talk it through, but if you leave it too long, it may be too late for me to help.
Satisfied Short Sale Clients
Check out some of the things that my past clients selling Short Sales have said:-
"You know exactly where you stand and what to expect, and Chris made the sale of my home as simple and as painless as possible. I was impressed time
and time again by both his patience and expertise."
"Through hard work and immense knowledge of his profession, Chris was able to directly negotiate with our lenders to ensure the best possible outcome
for us, and for that we are immensely grateful."
"Our family would like to thank Chris for the fabulous job he did in selling our home as a short sale. Chris has superior knowledge of the short sale
process, and he walked us through every step with expertise and compassion, keeping us focused all the way."
Chris took over the interactions with the banks, which radically reduced the stress for us. The banks were not very responsive and Chris took it upon himself to maintain pressure on them to move the process along, while keeping us informed all along the way.
"I knew going in that it wouldn't be easy, selling a distressed property during such a difficult economic market, but your great knowledge about the area
and real estate sales, along with your patience and innovative marketing strategies made it happen. Your presentation of my home was amazing."
"I had a limited financial timeline to work in, and because of Chris's local market knowledge and respect within the Realtor community, we went to settlement barely four months after listing the home."