Avoiding Foreclosure

It seems only fit to talk about something in the industry that is making headline news almost daily.  The rate of foreclosure had dropped slightly over the last few months and it has brought a breath of air to many people, but there are lots of "behind the scenes" things that have gone on to slow the procedure down.  One thing that has decreased this amount though, is the process of "Short Sales."

Short sales are sales that are consummated with both the homeowner and the homeowner's mortgage company agreeing to sell the house for less than what the homeowner owes on the property.  It would seem odd that the mortgage company would be acceptable with this offer, but in many ways it makes sense.  If the mortgage company were to foreclose on the property... they would in turn spend lots of money to make the process work, not to mention that in Alabama, there is a "right of redemption" period for a year.  This means that the mortgage company may have to sit on the property and tie up it's money for up to a year after the foreclosure.  Between interest, legal fees, and the total process it could cost the mortgage company upwards of $30,000 or more to foreclose.  If they can sell the home for a reasonable amount, then it is to everyone's advantage.

Short sales are much better for the seller than foreclosure.  A consumer that suffers a short sale can usually recover their credit and can actually purchase another home within 2-3 years.  In a foreclosure setting it can be as much as 7 years.  Not only this, but it does not hurt the credit score nearly as much as a foreclosure... giving opportunity for other credit issues as well as finding an acceptable job, or security clearance for a job.

It is estimated that as many as one in five families are behind on their mortgage payments from month to month.  One out of ten are in default being more than one month past due.  The mortgage company becomes distressed in this situation and will begin to try and find ways to assist the homeowner.  It may seem as though they are harassing the owner, but in all actuality, they just want it to get worked out so that they can get their money and everyone can be happy.  Seems reasonable... no?

So how does all this work... and how can foreclosure be resolved.  There are many ways...  The "making homes affordable" program has helped more people that you would ever dream possible.  This is a program that the mortgage company will work with you to re-structure you mortgage to make it possible for you to remain in your home and retain ownership, as well as make your credit closer to a normal situation.  This program is FREE!!!! If someone asks you to pay for this program it is a hoax!  It only takes a lot of patience and time with the mortgage company and the owner to find out if you qualify... this is not always and exact science... and the left and right hands don't always know what is going on.  But, if you qualify... you can be saved!  It is estimated that 50% or more of those on the Home Modification Program  have survived it.

A second option would be giving a "Deed in Lieu of Foreclosure."  This may be an option if your home is valued at enough that the mortgage company can assume your mortgage from you and take the property.  If there is too much negative equity or too much "work" to be done on the home to make it a sellable property, then it may not work out.  This too can help with the hit on the credit history... and also shorten the time to be able to buy another home.

A third option is that of the Short Sale.  Some reports say that there are as many short sales being sold right now as there are foreclosures in some states.  That said, it is a viable alternative.  It is also a system that requires lots of patience and trust.  IT IS NOT AN EASY THING TO DO, although the system is very easy.  Bank of America and Citi Mortgage have set up systems that are actually telling the homeowners to contact a realtor to do a short sale.  Amazingly so, it is such a better alternative.

I have been studying the short sale process for over a year now.  I began by reading and studying the information that was available... then took several classes on the idea.  The National Association of Realtors put together a certification and designation called SFR:  Short Sales and Foreclosures.  I took this class first.  Another group began the CDPE program:  Certified Distressed Property Experts.  It was begun with a husband and wife team in Florida that was living the short sale process before it was ever a recognized program.  They have built the structure that most short sales are processed through.  I have also completed this program and had the certification and designation.

To be honest with you, working through a short sale is the hardest sales venture that a real estate agent can undertake.  Most realtors do not like them, but have to do them as a necessity. Most agents don't have the understanding nor the expertise to complete a short sale.  Check out this short video as a comedic look at what could happen if you don't know how?!  Knowing How to Work A Short Sale?

 Even with this, working with Distressed Familes and Porperties is becoming a specialty for me.  The pleasure of helping families get through some of the worst times of their lives makes it all worthwhile.  (Don't ask me about that in the middle of the process... but afterwards LOL)!  In the last few months I have successfully assisted 3 families in short sale situations, am working another now,  and had one that did not sell and went into foreclosure.  They don't all work out; but it is worth an effort.  It is reported that as many as 70% of foreclosed property owners never placed their home on the market to sell.  From depression and embarassment... it made the process even worse!

If you know someone that is going through a hardship and is behind on their mortgage, please don't hesitate to call them and give them my information.  I am not a miracle worker... but I understand the process and can make the sale a reality.  If you don't feel comfortable with a call, just call me and I will make contact with them myself!

Thanks for reading my blog... and I look forward to talking with you soon!  If I can ever be of any assistance to you, please don't hesitate to call on me at any time!

Pitt