Do You Know a Homeowner Facing Foreclosure? Here’s A Way Out.
Headlines today are filled with stories about homeowners in financial distress—families facing a foreclosure on their home.
Millions of American home owners are wondering what to do.
Definatly, this housing crisis has produced its share of rumors and misinformation. One of the biggest ones is “just let it happen.” Why fight back; you won’t be alone, It’s too emotionally draining, and the government’s loan modifications aren’t helping many people anyway. Well, that’s only partly true. More and more changes for the better are happening within the lending institutions to help homeowners out or trouble.
Although government loan modification programs have fallen short of the mark so far, there is another solid, sensible option for homeowners. It’s called a short sale—a sale to a buyer where the seller’s lender agrees to accept less than the full amount owned.
Why Stop Foreclosure? Why sell short?
Here are a few reasons:
- Avoid the foreclosure stigma – Homeowners will always have to disclose that they had a foreclosure on any mortgage application and (many job applications) that they submit in the future. This can have an adverse affect on their future mortgage rates. Foreclosure is asked about specifically in credit inquiries. There is no seven-year time limit on this item.
- Protect credit score – Credit scores will be lowered by 300-plus points (per loan) by foreclosure. The impact of a short sale…is only about half that much.
- Improve eligibility for a government insured loan – The homeowner will not be able to get a government insured loan for 5-7 years. If you short sell it will be only two years from time of sale. A foreclosure is the one credit report item that is almost impossible to have repaired.
- Avoid a deficiency judgment – In some states, lenders can seek a deficiency judgment against the homeowner and collect any amount they do not recover at sale.
- Protect employment prospects – Many employers run credit checks on prospective employees. Foreclosure is one of the top items that will put a potential new hire, or even current employment, in jeopardy.
These are only some of the reasons, but there are more.
Another tip. Don’t believe everything you read about how long short sales take and how few get finalized. Short sale timelines, while still longer than normal, are shrinking as lenders get their systems streamlined. I know where to find buyers, and how to negotiate the buyer’s offer effectively with lenders and get the deal closed—so the homeowner can move on with life and recover and experience a brighter future.