In today’s market, many Arizona homeowners are facing dire situations. With falling home values and increasing expenses, many homeowners aren’t sure where to turn. You’ve heard the stories of loan modification hell. You’ve seen seen the effect of your neighbors just walking away. You want to do the right thing, but you’re not even sure what your options are.
Timing Is Everything
The fact is that Servicers and Lenders don’t WANT to foreclose on homeowners. The amount of time and money the banks spend going through that process of foreclosure and re-selling the home means huge losses to their bottom line.
Unfortunately, with the millions of homeowners going through foreclosure, lenders will make mistakes. There are horror stories of banks foreclosing while in the loan mod process, accidentally foreclosing on homes that are days away from being sold, and even foreclosing on homes where the seller has not even missed a payment!
That is why it is important to work with a short sale team in Arizona who has experience working in every short sale scenario; a team that has systems and relationships in place, and the persistence to make sure that the bank has all the correct pertinent information before they make a decision. Most homes go to foreclosure because of a lack of communication with the banks. Not with our team.
If you are in a position where you are behind, or will start falling behind on your mortgage payments, due to medical emergency, job loss, divorce, or any other hardship, there are options available to you BESIDES foreclosure.
1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.
2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.
3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.
6. Partial Claim – A loan from the lender for a 2nd loan to include back payments, costs and fees.
7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.
8. Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.
–Chapter 7 (Liquidation) To completely settle personal debt.
–Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.
–Chapter 11 (Business Reorganization) A business debt solution.
9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale. On the other hand,…
10. A Short Sale Settlement can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.
Ready to get started? Find out if you qualify for a short sale!