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Navigating Foreclosure

 

Foreclosure is not the only option. Download your copy of the Foreclosure Prevention Guide below. (no information required)

 Foreclosure Prevention Guide

 Navigating Short Sales

Alternatives to Foreclosure

Foreclosure VS Short Sale MAP

FAQ:

Q. What is a short sale?

A. A short sale is the process by which homeowners can sell their home for less money than they actually owe on the mortgage(s). This is accomplished by providing proper documentation to the lender(s) to convince them to reduce the mortgage balance to allow the sale. If the sale is approved, the mortgage lender(s) will actually take a loss on the mortgage. If a bank approves the discount of a mortgage, the home can be sold for a price lower than the amount owed without the seller having to come up with cash to cover the shortfall. The mortgage is satisfied and any foreclosure process stops

Q. Do I Qualify For A Short Sale?

A. The qualifications for a short sale include any or all of the following:

  1. Financial Hardship – There is a situation causing you to have trouble affording your mortgage.
  2. Monthly Income Shortfall – “You have more month than money.” A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
  3. Insolvency – The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

Q. Does a homeowner benefit from a short sale?

A. First and foremost, a short sale relieves the stress of being in foreclosure and it allows the homeowner to get rid of their big mortgage payment and move on with their lives. A short sale allows you to stop a foreclosure proceeding and get a fresh start. In our experience, this is the primary benefit to the homeowner. On the credit side, a short sale is arguably the lessor of two evils. Having some late payments, and a foreclosure filed has already done damage to your credit.. However, a completed foreclosure generally does more damage than a short sale agreed to by a lender. Obviously, a bankruptcy significantly damages your credit score.

Q. What is HAFA?

A. HAFA is the acronym for Home Affordable Foreclosure Alternatives Program, a government sponsored program to improve the short sales process.  HAFA created the Home Affordable Modification Program (HAMP) which provides incentives in connection with short sales and deeds-in-lieu of foreclosure.

Q. What Is A Mortgage Modification?

A. A mortgage modification is a process through which your mortgage lender changes any or all of the following:

  • Your interest rate
  • Your principal balance (through a reduction)
  • Your loan terms (example: from an adjustable to a fixed rate)

This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.

Q. Why Would A Lender Modify My Mortgage?

A. Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.

Q. What Do I Need To Qualify For A Mortgage Modification?

A. According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:

  • Information about your first mortgage, such as your monthly mortgage statement
  • Information about any second mortgage or home equity line of credit on the house
  • Account balances and minimum monthly payments due on all of your credit cards
  • Account balances and monthly payments on all your other debts such as student loans and car loans
  • Your most recent income tax return
  • Information about your savings and other assets
  • Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources

If applicable, it may also be helpful to have a letter describing any circumstances that caused your income reduce or expenses to increase (job loss, divorce, illness, etc.)

Q. How Do I Qualify For A Mortgage Modification?

A. The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):

  • Loss Mitigation
  • Mortgage Modification
  • H.O.P.E.

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP).

Q. What Is A Home Affordable Refinance?

A. If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

Q. What Are The Qualifications For A Home Affordable Refinance?

A. According to the resources released by the government, following are a list of qualifications:

  • You are the owner occupant of a one- to four-unit home
  • The loan on your property is owned or securitized by Fannie Mae or Freddie Mac
  • At the time you apply, you are current on your mortgage payments (you haven’t been more than 30 days late on your mortgage payment in the last 12 months, or if you have had the loan for less than 12 months, you have never missed a payment)
  • You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
  • You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan

Q. What If I Don’t Qualify For A Modification Or Refinance, Can’t Afford My Home, And Owe More Than It’s Worth?

A. You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. 

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Ed Cummins Broker/Owner
Assist2Sell
SELLERS & BUYERS REALTY
(484) 938-7434 Phone
(484) 938-7947 Fax
info@ChesMontRealty.com

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