How Homeowners Can Avoid Home Foreclosures
67Stop Foreclosure
Home Foreclosure Help
If you are facing Home Foreclosure and are at the point where you have been turned down by all the Foreclosure Help Agencies, it may be time to consider a "Short Sale."
Believe it or not, even with all the empty talk about helping homeowners with the stimulus plan and bailouts, home foreclosures are on the rise. The first quarter of 2009 seen an increase of 24%. Read the article on Foreclosure rates.
The Short Sale of a home that is facing foreclosure is a pretty simple process to understand. First of all, the purpose behind this is to avoid a foreclosure that is facing the homeowner because they owe more on their mortgage than what the value of the home is.
The Banks and Lenders are more than happy to allow a Short Sale because the average cost of foreclosing on a home is $80,000.00, and the foreclosure process takes several months to over a year to complete. In most cases, a Short Sale can be completed within weeks.
In this type of a home sale the Real Estate Agent will find a home buyer that is willing to buy the home for less than the current balance of the mortgage. The mortgage company or lenders will then forgive much of the homeowners current loan. In many situations, the entire amount owed on the loan is not forgiven.
Short Sales and Their Success Rate
Though a Short Sale is a very simple process to understand, a Short Sale is not a simple process to go through. The truth is that there is a very high rate of failed Short Sales. We'll look at some of the reason a Short Sale may fail. Because of the complexity involved it is suggested that the homeowner use short sale negotiators, a loss mitigation specialist, or real estate lawyers who specialize in the short sale of homes.
1. (Tax Lien Holders)
Tax Lien Holders include; income, estate or corporate franchise tax. If any of these liens exist on your home, the holders of these liens must also agree to some form of settlement before the lender can accept a short sale agreement.
2. (Mechanic's Lien Holders)
A mechanics lien is a lien that has been placed on the home by a contractor, a workman, or a company that supplied materials for work performed on a home. If a mechanics lien has been filed against you, those who filed the lien must agree to a settlement before the lenders can authorize a short sale.
3. (Mortgage Insurance Company)
If your lender required mortgage insurance on your loan, the insurance company will also have to be included in the short sale negotiation. The reason for this is because the lender will suffer a loss in the sale, and the insurance company will be asked to pay out on the mortgage insurance policy.
Homeowners need to understand that all this mortgage forgiveness is not about helping the homeowner, the bottom line issue is that if the lender will "lose less" by allowing a short sale, then they will allow it. If the lender will lose more money through the short sale process, they will foreclose on the home instead.
If you would like more information on finding foreclosure help, go to Foreclosure Help.
Another excellent site is Short-Refi.
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Thanks for stopping by Nancy. The Short Sale is really becoming big news because all of the stimulus and bailouts have failed to help most homeowners, so in a last ditch effort to offer a small ray of help, Short Sales are coming to the forefront.
On a scale from 1 to 10, ten being a great help, Short Sales are a 3. But when you are at the end of your rope, anything is sometimes better than nothing at all.
BTBF....Thanks for this timely and informative Hub page....My daughter is in this very predicament right now...In 2006 they refinanced, used their equity to add home improvements, including an upstairs master bedroom suite of 700 sq ft., only to find out two years later, after an appraisal, that they had actually lost equity and are hovering around the scary upside down margins...unbelievable that these two hardworking kids, investing in their home, are now faced with a penalty for doing so....rather than upgrading to their dream home, with reasonably expected home equity, they are now faced with going under, losing everything, and having their credit rating destroyed in the process....This is total BS, and I put the blame on our blatantly incompetent congress....Short sell seems like the only option they have left....
Good to hear from you again Maven. I'll tell you, I am so fed up with all the money this Government is printing and throwing to the wind. It just seems to me that they spend their money foolishly. As I watched these bailouts and stimulus plans, I listened as many economists said that these huge corporations should simply file bankruptcy, instead of throwing billions of dollars at a dead horse. Now, after all our foolish Government has done, we find that these economists were right. We wasted billions only to see many of them end up filing bankruptcy!
I was also sickened when the current President gave millions of dollars to California for the purpose of California buying up foreclosed homes. So, instead of helping the homeowners save their homes, the State gets the money and the residents go under. Just appears backwards to me.
BTBF...Absolutely agree with everything you said....
I noticed on Drudge that Oklahoma is confirming their sovereignty clause in their state constitution....Getting ready, like Texas, for change...? Not the kind of change Obama pontificated I would imagine...
No matter what people call it, our Government has slowly been trying to destroy the freedom and sovereignty we once enjoyed; this is tyranny. How I wish I was not so sick Maven, I would have loved to face this Government head on over this issue. Not that it would change the corrupt power in high places, but I believe this Nation is worth fighting for. I hope I live long enough to see change.
Have a good day Maven.
How does the short sale option affect the seller's credit score, in general, and as compared to the short refi option? Thanks
Hello Valerie,
The Short-sale also known as a pre-foreclosure sale always involves a sale of a home that the lenders has agreed to accept less than the full amount owed on the mortgage.
Short-sales happen if there isn't enough equity to sell and pay off the complete mortgage debt. Also, when the home in question is located in an area where the home prices are on a decline then it may be sold off for less at a price that isn't enough to cover the full balance of the loan.
Short-Sell will allow the home owner to sell the property and pay off the mortgage loan to avoid a foreclosure and damage to theirr credit rating.
You may qualify for the short-sell if:
1) the "as is" appraisal value is at least 70% of the amount you owe on the mortgage, and the sales price is 95% of the appraised value of the home.
2) if this loan is at least two months delinquent prior to the pre-foreclosure sales closing date.
3) the home owner is able to sell the home within 3 to 5 months, this also depends on what your lender will agree to.
The Short-sale is far less damaging than the foreclosure or deed-in-lieu is. The FICO Credit score will probably drop down by 75 to 100 points if you do a short sale, as compared to the 250 points the FICO will drop if you're on a deed-in-lieu or foreclosure.
Favorite Links
- Bank Foreclosure Help, How To Stop Foreclosures on Your Home Mortgage
The Lenders and Banks are getting ready to start the foreclosure process on my home and I need foreclosure help now. Help is available, and it’s just a phone call or click of the mouse away. Several of my...
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Copyright © Robert Lee. 2009, All Rights Reserved.
The information provided is for informational purposes only, always seek the advice of a professional.
Nancy's Niche Level 1 Commenter 3 years ago
Very good information...I was going to do a search on Short Sales...You hear that term a lot now....