Distressed Properties and Your Options

What are my options and how will it affect me?

Loan modification: If you know you will not be able to make your monthly mortgage payment or perhaps you have already fallen behind, you may be able to negotiate the terms of your mortgage to modify your payments.

What steps do I take?: Call your mortgage company and ask them if you qualify for a loan modification. Many laws have been put in effect to help homeowners. You will have to send them a hardship letter along with your financials and they will determine if you qualify. Be persistent- you may have to talk to many people to get the desired answers.

How will this affect my credit?:: If you are behind on your payments, only those late payment will be reported

Short Sale: If you owe more on your loan than what you are able to sell your home for you will be looking at a short sale. Your realtor will be able to help you negotiate with the bank the difference from the loan payoff and the value.

What steps do I take? Call a realtor. He or she will do a market on your home and let you know what the current market value is. Your home will be marketed to potential buyers and once and offer is presented, your realtor will work with your mortgage company to approve that offer.

How will this affect my credit?: If you are behind on your payments, those late payment will be reported, however, it will show as a satisfied loan on your credit report. You may be able to get a new loan in as little as 6- 12 months depending on the rest of your credit.

Deed-in--lieu: If you have had your home on the market (most mortgage companies require a minimum of 3 months) you may be able to negotiate a "friendly" foreclosure (deed-in-lieu). Which means you are giving your property back instead of going into foreclosure. This can be a long process, and you can do this while trying to get an offer on the property in a short sale.

What steps do I take?: Call your mortgage company and let them know you would like to start the deed-in-lieu process. You will have to provide a hardship letter along with your financials and they will take this into review, do an appraisal on your property along with a title search.

How will this affect my credit?: If you are granted a deed-in-lieu you most likely will be asked to vacate the property within 2 weeks of the approval, keep in mind it will take a while to get the process approved. Should you receive a short sale offer during this time, you can ask to switch your request and work on the short sale offer. This will affect your credit better than a foreclosure and you may be able to get a new loan in 2-3 years.

Foreclosure: If you choose to walk away from your home or the above requests have not been granted you will be looking at foreclosure. This process usually starts once you have been behind in payments for 3 months. Your property will go to a sheriff sale. Once the sale has taken place you will have 6-12 months (depending on the amount of acreage you are on) to sell or redeem your property, this is called a redemption period. Keep in mind there is still time to help redeem your credit.

What steps do I take?: If you would like to try and sell your home in a short sale contact me to help your decide your value and help market your property, along with negotiate your offer once you receive one.

How will this affect my credit?: If you do foreclose on your property if will affect your credit substantially compared to a short sale or deed-in-lieu. You will most likely not be able to get a new loan for 3-5 years.

There are so many questions, options, and stages to each of these procedures. You are not alone- call me today I will be with you every step of the way. This is a stressful time, allow me to help relieve a little of that stress, and to have the satisfaction that you gave it your best efforts during this trying economy.