What are the options, should you find yourself on the verge of getting a foreclosure notice? You'll know it's inevitable... for some reason you have gotten behind in payments and/or have decided to let the home go back to the lender. First, if you have gotten behind, you should resist the feeling of trying to avoid the situation. If you want to truly keep your home... you should be proactive to try to work out new terms with your lender. What is hard to understand is... the puzzlement of how to accomplish this.
To try to keep your home... you must call your bank, your mortgage broker, or the servicing company. Find out who to talk/write to before much time passes. Time cost you accruing interest and penalties through the non-payment that you owe on your past due loan. The bank, who now owns your loan, will/may have a REO/Acquisitions department. This department will want everything in writing, and every page/document you send in will need the name of the homeowner and account number written on each page. This department will need/require a letter of hardship stating why you can't pay... how this situation came about, etc. Be detailed. Keep copies of every piece of documentation you send. Try to get a refinancing at a lower rate or some type of re-structure plan. The REO department will also require 2 years of your tax returns, 3 months of bank statements, 3 months of pay stubs, each month for as long as it takes... three, six to nine months of this. Then, they will tell you that you MAY be eligible for a short sale and not a refinance.
A short sale is when the lender agrees to take less that is owed on the home. They will tell you to get a Realtor to list the real estate. Now, here's a little bit on that part. You need to find an experienced Realtor to list. REO companies have the control to cut the Realtors commissions for all the hard, agonizing, professional work to get the Real Estate to a successful closing. Realtors only get paid if the short sale closes... and very few get to closing. Why do they not make it to closing? Well...
1. The seller owes more than the home is worth.
2. The seller has little equity in the home and can't pay the Realtors commissions.
3. The seller gives up on all the repetitive documentation the lender requires from the seller each month that passes. (the REO/acquisition department may ask for new letter of hardship, new pay stubs. They will not take copies stating nothings changed.
Okay... lets say you have some equity in you home, and have enough funds to pay a Realtor... if you close. The Realtor must list your property with your approval from the lender... There are over 100 items required to list one, normal property. A listing in distress of foreclosure proceedings, has many more steps. The Realtor must provide, for this type of short sale listing, a BPO, three comparison sales for the house, and three active listings for your home, in hopes of selling it. The Realtor must also provide detailed photos of the home, inside and out, and must provide a number of other documents to the lender, as well as working with the homeowner every 3 weeks, for sometimes months. All this with no guarantee that the seller will not quit on them and will move forward with the short sale. Sometimes that means the seller bringing money to the closing table.
Now you may understand why you have to have the numbers to make a short sale work and... the dedication to stay with it for yourself, as well as the Realtor, that will not get paid unless you continue to follow through with all the documentation the lender will require.
Other Potential Solutions can possibly include:
1. Negotiating a loan modification.
2. Refinancing the loan.
3. Listing the home as discussed above.
4. Selling the home to an investor on your own.
5. Declaring bankruptcy.
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