With all of the recent news about the state of current Real Estate market there is a lot of misinformation and misunderstanding about the Foreclosure and Short Sale processes. Don't make one of the biggest financial mistakes of your life based on inaccurate and incorrect information. There is help out there and in most cases we can help. We can provide you with confidential guidance and alternatives to having your home foreclosed on. When you contact me I am dedicated to serve you honestly, fairly and with kindness.
The following is a brief list of the most commonly asked questions and answers about the Foreclosure and Short Sale Process.
How long does it take for the bank to Foreclose on a home owner? In California the total process takes 6 months from the date of the first missed payment until the bank transfers ownership back to the mortgage holder. This process is called a Trustee Sale and it usually happens at the local county court house.
I just received a letter from my mortgage company indicating their intent to start the foreclosure process, what should I do? Don't ignore the letter and act quickly to contact us to review your options. Foreclosure letters come in many forms and each could represent different time lines for you.
Is it true that after the bank takes the house back, we will be locked out? Yes. However by acting quickly and as soon as you believe you can no longer afford to keep up with your payments you may be able to prevent this all together. Again, the key to avoiding this process is acting fast and contacting a professional like us to act as your agents in dealing with the banks. Most importantly, the bank does NOT want to own your home and are more than willing to work out an alternative option to foreclosing on your home. Don't wait until a deputy and lock smith show up at your door, that time it is too late!
I'm so worried that I can't eat, sleep or function. I'm embarrassed and I feel all alone, how can you help? We are dedicated professionals and our job is to educate you as to the options you have available to you. When you contact us we are here to serve you honestly, fairly and in the strictest confidence. We are here to listen and guide you through this difficult time. You are not alone and currently 43% of all homes listed in today's MLS are in some form of the foreclosure or short sale process.
I don't have the money to pay you and there is no equity left in my home. How will you get paid for your services? This is a job and we do need to get paid too. However, when selling your home through the short sale process the bank pays our fees--NOT YOU. Once you contract our services, we take over the negociating process with the bank. If we don't sell your home, you are under no obligation to pay for our services.
Recently it seems like everyone knows about my difficult financial situation. I have been getting flyers, letters, postcards and other solicitations from people that say they can help. How did they find out about my situation? Can any of them help? Once you have missed 3 payments a Notice of Defult is recored with the County Recorders office stating the banks intention to foreclose on your home. A foreclosure is a public process. Once the notice is filled there are several companies an individuals who take the information and attempt to market their services to you. Your information will even be sold over the internet to hundreds of companies such as Realtytrac. This information is even sold to some less than ethical parties who make promises they can't ever fulfill. Remember anyone who contacts you is trying to make money.
What is a Short Sale (short pay)? When your lender agrees to accept less than what you owe to discharge your mortgage and sell your property. The lender will ask you to contract a local realtor to do a Broker Price Opinon on your property. They will also send you a paperwork package for you to completein order to prove your hardship. We can walk you through the hardship package and advise you on the proper way to complete this package to expidite the process.
Are you a Law Firm? No, we are a team of Licensed Real Estate Professionals who work closely with the banks and their work-out departments. We would be happy to refer you to the Real Estate Attorney that we use for all legal matters.
I have been contacted by companies offering to "Pay Cash For Your House" are you any different? YES, We are not in the house buying business. An investors willingness to buy your house is based on equity. If you have a lot of equity someone will buy your house at a discount because they know they will "flip" it or rent it using your equity to profit.
Why would my bank accept less money or work with me? Any lender can establish an estimated cost of loss if you default. Most banks and mortgage companies even have a Loss Mitigation or Prevention department. As a general rule "Lenders" do not want to own property. They are lenders and not property managers. The cost to maintain your property after they take it from you includes but is not limited to: taxes, insurance, maintenance, etc. The Bank's "loss" can continue to grow long after you are gone. Even at a sale the Bank expects to get much less than market rate because it is not an ideal way to sell property. In most cases a preemptive offer or attempt to sell your property, even for less than you owe, will actually be a better option for the Bank.
How does a short sale affect my credit? If we can sell your property before a foreclosure sale it will typically show up as "paid" however the lender does reserve the right to make a notation typically "less than originally owed". The best way to preserve your credit is to act quickly. The actual foreclosure sale and subsequent judgment for the sale difference is what you MUST avoid. Your credit report will show the sale and in most cases a large judgment against you for the banks losses.
Are there tax consequences if the lender forgives some of the debt? YES, there might be. Your Lender will report the debt as a tax loss. Similarly you will have to account for the gain. In most cases if it is a primary residence there are 5 situations that will forgive the tax burden. 1. Insolvency - your total debts exceed your total assets at the time your debt was settled or deemed non-collectable 2. Bankruptcy - the debt was already discharged through a bankruptcy proceeding 3. Indebtedness due to certain real property business losses 4. Indebtedness due to a qualified farm expense 5. Discharge of your debt was treated as a gift.
The sale date is coming fast, do I still have time to work with the bank? In most cases the Lender will make every effort to work this out before the actual sale. In fact, they will ususally review offers right until the actual sale date. You also might be able to take action that secures more time. However, you must act very quickly and call us for a free consultation.
What will I need for the Lender? Most Lenders will require information from you. Essentially it is a reverse loan application. Instead of convincing the lender that you are credit worthy, your data should indicate your inability to pay. This may include: personal hardship letter, tax returns, pay stubs, bank statements and etc.
I heard there are exceptions or different rules for owners whos families are in the Military. Is there any assistance for Military families? Yes, Mortgage relief is available for military personnel under the Servicemembers Civil Relief Act (SCRA). It prohibits the sale, foreclosure, or seizure of service member property secured by the mortgage during the period of military service, or within 90 days thereafter. However, there are some stipulations.
Should I try and sell my house myself? FSBO (for sale by owner) is always an option while you own the property. Most Lenders will require that you list your home for sale with a REALTOR who subscribes to MLS. It is a proven and the most credible method of selling property & for the highest price in the shortest time. The Listing Agreement is often proof of your willingness and attempt to sell. Which could secure more time for your house to sell.
I'm ready to work with you, what's next? You need to call us for a brief interview. We will get you three documents that you must sign before we proceed. a) Lender authorization letter which will allow us to communicate and get information from your Lender. b) Listing Agreement which will allow us to market and sell your property. c) Property disclosure statement verifying the condition and items in your home.
Is this legal? YES, We do not condone any fraudulent activity. Everything that we do for you is done legally and negotiated with all parties involved.
What options do I have? The options available to you depend on a couple of factors. a) the immediate disposition of your mortgage (what stage the mortgage is in) b) your goals, concerns and objectives. Options we might review with you include: Pre-Foreclosure Sale, Short Sale, Deed-in-Lieu of Foreclosure, Chapter 13 Reorganization of Consumer Debts, Do Nothing, Reinstatement Plan, Repayment Plan, Loan Modification, Loan Restructuring, Loan Refinance, Loan Forbearance, Assumption Partial Claim, and others. Please make sure you have exersized every option before you give up, we are here to help.
I have a second mortgage on my property. How will that get paid or go away? In this market there is no second or third lien holder who has any interest in foreclosure. In fact the worst thing they could hear is that the 1st position lien is going to foreclosure. When the 1st position goes to foreclosure they are guaranteed to get nothing (in the current market). Many second position lien holders are settling for as little as $1000. Most 1st position investors are setting policy to buy 2nd position for as little as $1000. Everything starts with an offer on your property. The offer gets submitted to the first lien holder with a proposed HUD. If the second position is completely left out we usually pull a little from the first to satisfy the second. (on the proposed HUD) . A non-performing or "bad" loan is not good for the bank to have on their books. It hurts their loan portfolio and ability to borrow more money. In many cases it is better to accept something just to close out the loan.
Finally, contact Michele Vaughn AS SOON AS POSSIBLE. By calling today we can schedule a discrete and confidential appointment to review your options. We'll will explain how we can help you, and determine if your situation could qualify for Loan Modification or the Short Sale Process.
Michele Vaughn, Professional Realtor & Pre-Foreclosure Specialist
Don't Lose Your Home to Foreclosure! Call me for the Help you need at 949-295-7171.
