Posts Tagged ‘prevent foreclosure’

Understanding Real Estate Short Sale

Thursday, August 6th, 2009

Foreclosure is a major problem in the real estate market nowadays with lots of people losing their jobs. A short sale can help a homeowner in foreclosure. When a homeowner cannot keep up with his or her mortgage payments, a real estate short sale may be a sound solution for the homeowner. You do not have to wait until you are late on your mortgage payments to start the short sale process. Find out what is a short sale and ask your Realtor early about doing a short sale when you know that you might not be able to keep up with your mortgage payments soon.

Understanding What a Short Sale is

A short sale is a sale of real estate in which the proceeds from the sale are smaller than the mortgage balance on a loan secured by the property sold. In a short sale, the bank or mortgage lender agrees to discount a mortgage balance because of an economic or financial hardship on the part of the mortgagor. This negotiation is all done by the bank’s loss mitigation department.

Stopping Foreclosure

A short sale is often done to stop foreclosure. Often a bank will allow a short sale if they think that it will result in less financial loss than going through with the foreclosure process as there are carrying costs associated with a foreclosure. A short sale is often faster and less expensive than a foreclosure. In short, a short sale is just a process of negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. The process does not wipe off the remaining mortgage balance unless the bank expressedly states it in writing.

Learning about Short Sale

There are plenty of books written about short sale. Some books are for homeowners facing foreclosure. These books explain to them what a short sale is and how it can help them save their properties from foreclosure. There are also books aimed at real estate investors wanting to take advantage of the foreclosure market. Foreclosed homes are often cheap so new home buyers and new real estate investors can buy them fairly easily. Examples of books on short sale are The Art of the Short Sale, Short sales: An Ethical Approach, Doctor Foreclosure: The Secret to a Successful Short Sale, and Short Sale: A Practical Approach.

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Can Homeowners Refinance to Prevent Foreclosure?

Wednesday, April 29th, 2009

Since last year, a lot of homes have been foreclosed on and the rate of foreclosure continues to increase and it did not help that more and more people lost their jobs. With so many job losses, people are unable to come up with their regular mortgage payments. When they have todefault on their loans, the banks begin the foreclosure process. Fortunately, there are a few things that homeowners can do to prevent foreclosures

before the homes are sold in foreclosure sales.

Many people would attempt to contact the lender first to explain the situation. To avoid foreclosure, homeowners would need to persistently contact the bank to try to negotiate a payment plan. With the new stimulus plan, a lot of banks are more than willing to negotiate. You can sometimes do a loan modification to reduce your monthly payments but the life of the loan may be loner. If you still have acceptable credit, you might be able to refinance to lower your monthly mortgage payments.

With the interest rates hitting all time low, some homeowners find good loans to refinance before the banks sent the notices of foreclosure. However, most people who are already facing foreclosure cannot refinance so, for them, this is not a solution. There may be some types of governmental assistance, though, that will help homeowners who are already in foreclosure to get a new loan that will reduce their monthly payments. But, again, few people qualify for these governmental loans.

Next, peoplewho cannot afford to pay mortgage payments on their current homes may try to sell their homes. This method may work for homeowners with a lot of equity in their homes. However, because it is a buyers’ market right now, most homes are sold at discount and the money obtained from selling a home might not be enough to repay the mortgage loans.

If it comes down to it, homeowners can also file for bankruptcy protection. Many times, the bankruptcy process will delay the foreclosure process. Sometimes, people can stay in their homes after they file for bankruptcy protection. The banks involved can, however, file a petition to resume the foreclosure process so that they can sell the homes and recoup some money.

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