NEW GOVERNMENT SPONSORED OPTIONS

TRADITIONAL REFINANCE OPTIONS

FORECLOSURE OPTIONS

SHORT SALE: (Loan Discount) or (Pre-foreclosure Sale)

If you are unable to afford your payments and want or need to sell your property to avoid foreclosure, your mortgage lender may approve a short sale. A qualified buyer and a contract for sale/purchase are required. However FRG can file Consumer Protection requests with some lenders to get you pre-approved for a short sale. Some states like Florida allow lenders to seek a deficiency judgment against the seller for the amount owed on the home in a foreclosure suit. In many and if not most Short Sales, FRG negotiates with the lender to forgive the deficiency amount owed on the property. The more difficult your hardship the better chance of having your deficiency forgiven. Second liens sometimes make a short sale more difficult. Other times, FRG negotiates with second lien holders to accept a payoff from the first lender which is usually around $3,000 as full payment to release the lien. In a short sale, FRG uses negotiation, arbitration and sales experience to get the seller the best deal. Many Real Estate Brokers, Real Estate Agents and individual Investors have underestimated the due diligence, work and time involved in short sales and is the reason they have not been able to secure quick short sales with acceptory terms and conditions for buyers and sellers. Since homeowners don’t need to pay fees to get a short sale completed it is important and to their advantage to use the best loss mitigation company and real estate agents with the most experience who specialize in pre-foreclosure or short sales. Most financial experts believe short sale is a better solution for distressed homeowners than foreclosure and Deed in Lieu. Even the Federal Government is incentivizing lenders with money to complete short sales as opposed to foreclosure. In a recent Wells Fargo offer via HUD, the homeowner was offered $750 to do a short sale and $1,000 if it is sold in 90 days. Sellers in pre-foreclosure will be looking for Real Estate Agents within the next 90 days who specialize and are successful in selling short sales. Some lenders like Wells Fargo have already started sending letters to selected distressed homeowners informing homeowners to list their homes with a real estate agent and offering to pay 8% commissions to Brokers to get the homes sold in 90 days. FRG anticipates the rest of the lenders to follow Wells Fargo making pre-foreclosure sales the largest part of the real estate market for the next 2-3 years. A short sale will have the least impact on your credit record. After the short sale, some people have been able to get credit and financing in as little as 6 months to 1 year but will vary from person to person depending upon their entire credit profile. Some lenders have even listed a short sale loan as “Paid” and or “Paid as Agreed” on the credit report depending on the situation which may actually increase your credit score.

DEED-IN-LIEU OF FORECLOSURE (DIL):

First, lenders may require you to try and sell your home via a “Short Sale” for at least 90 days at fair market value. A DIL is basically a transfer of property to the lender in consideration for forgiveness of the debt. In prior years, you would have to be at least 90 days behind, however in today’s market you may only need to show a permanent hardship that will not allow you to pay your mortgage payments moving forward with most lenders. Usually if you have a second lien on your house, you most likely will not be able to file a DIL since a DIL does not wipe out secondary liens like a foreclosure. Lenders use to waive deficiency balances; however with homes sometimes 50-60% below value, lenders are requesting some homeowners to sign notes on deficiency balances. Most credit advisors view a Deed in Lieu almost as bad as a foreclosure on your credit record. A DIL will remain on your credit report for 7 years. Some lenders even report DIL’s as a foreclosure on your credit report. A DIL drops your credit score by 250-300 points and mortgage credit experts advise it may take 3 or more years for you to qualify to buy a home with acceptable financial rates and get new credit.

FORECLOSURE:

Foreclosure is the worst option a distressed homeowner has in resolving their financial situation relating to their residence or investment property. Simply put, allowing your home to proceed to foreclosure is only the start of your potential future problems. First, a foreclosure may expose the homeowner to additional future legal problems. Usually a foreclosure results in an order signed by a Judge finding you are responsible for court costs, attorney fees and other expenses the lender will incur. Homeowners could be required to pay a deficiency balance on the loan. In previous years, when the economy was booming, chasing deficiency balances was a waste of time for lenders. Most homes in foreclosure usually meant a “breakeven” or 5% loss compared to 50-70% losses today. With these 50-70% losses in home value, lenders are almost required to recoup their costs and pursue deficiency balances. In previous years, lenders could even sit on the home for a year and the value could increase 5-10%. In today’s economy it is rumored these deficiency balances are now being packaged and sold to debt collectors for around $.40 (forty cents) on the dollar. In other words $1,000,000.00 (1 million) in deficiency balances are worth $400,000.00 cash to a lender and are significant revenue opportunities. Later when you are more financially stable, lenders or debt collection companies can come back and sue to garnish your wages and or attach liens to any other assets you may own. Further, a foreclosure will remain on your credit report for 7 years and will lower your credit score 250-300 points preventing you from being able to get credit for 3 or more years. Finally if the lender does not forgive the debt and pursues the debt by selling the deficiency balance to debt collectors you may be liable for the taxes if the debt collection efforts continue past 2012.