From all reports and my own observations - we're seeing the market start to rebound.  Prices are still low and those properties that are priced well are seeing multiple offers.  This is a good sign for the economy.  Those buyers who were waiting for the bottom of the market - well it's here today and gone tomorrow. 

I predict that the remainder of this year the market will continue to stablize and next year we should start to see a gradual increase in market values.

Those buyers who are still on the fence - I recommend you take that step to homeownership.  Don't let fear drive you.  Yes, it's a big step, but one that is well worth it.  As long as you're making an informed decision and understand the terms of your loan, it's an investment in your future. 

You've stressed and gone down every avenue you can to try to keep your house, but you're over your head!  What can you do?  Let the house go into foreclosure?  Rather than ruining your credit, a short sale may be a viable option. 

A short sale can be a dignified solution to a financial crisis.  Many homeowners today owe more than they are worth!  What is a short sale?  In a nutshell, you owe more than the house is worth, and you find a buyer who's willing to purchase your home at today's market value, you ask the bank to take less than is owed to release the house so the buyer can purchase the house.

There are several qualifications for a short sale, such as:

1. Financial Hardship - There is a situation causing you to have trouble affording your mortgage.
2. Monthly Income Shortfall - "You have more month than money." A lender will want to see that you cannot afford, or soon will not be able to afford your mortgage.
3. Insolvency - The lender will want to see that you do not have significant liquid assets that would allow you to pay down your mortgage.

You do not necessarily have to be behind on your mortgage payments for lenders to consider a short sale.  While this may have previously been the case, today lenders are looking for verifiable hardship, monthly cash flow shortfall, or pending shortfall and insolvency.

If you meet these three requirements and believe that you soon may be unable to afford your mortgage, act immediately. Any delay could limit your options. Do not wait until the countdown clock to foreclosure has started and you have even less time left.

Foreclosure is a process, there is time to make decisions that may result in better outcomes.

The foreclosing party, in many cases a lender, can stall a foreclosure up to the final day of the process. Today, many lenders will stall a foreclosure with as little as a phone call from you explaining that you are trying to sell, and almost all lenders will stall a foreclosure with a legitimate contract. For real estate professionals who understand foreclosures and short sales, there is time available until the foreclosure process is complete.

It is understandable to have reservations about letting the world know that you owe more on your home than it is worth. However, according to recent estimates, one out of five homeowners in the U.S. is in the same situation. You are to be congratulated for admitting you need help, taking action, and finding a professional who can work with you toward a solution.

With recent estimates showing 40-60% of U.S. sales will be short sales or foreclosures, you are not alone.

Are short sales more difficult to execute? Yes. Do you, as a homeowner, need to learn about a new process? Yes. Are they impossible? Absolutely not.

If you decide that a short sale is a good option for you, please make sure your real estate agent knows what they are doing!  It is imperative to hire a realtor who can help you sell your home.  I recommend hiring a  Certified Distressed Property Expert.  While there are no guarantees in any transaction, more and more short sales are being approved regularly. This is far from an impossible process.

This is a myth that potential sellers hear all the time. Thankfully, this is just not true. In fact, many agents are getting calls from buyers who say they only want to look at foreclosure and short sales.

Find a CDPE

If you're having problems paying your mortgage and don't know where to turn, there is help available!  Before you get behind in your mortgage payment, contact your lender.  Ask to speak with someone in their loan modification department.  Make sure you make notes of your conversation with the department (such as the name, phone number, and outcome of call).  Explain your situation (job loss, health, divorce, hour reduced, mortgage escalation) and ask for the documentation needed to do a loan modificaton or forebearance.  With a loan modification, the lender should renegotiate the loan to a more manageable payment.  With a forebearance, the lender would allow you a certain number of months where you wouldn't make payments, but those missed payments would have to be paid back over time.

Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with their current borrower to lower their payment or possibly improve their terms in order to keep them in their property. The average foreclosure can cost a lender from 35 to 50% of the value of a property (or more) so keeping a borrower in their home is better for everyone.

What do I need to qualify for a mortgage modification?

According to the Making Home Affordable government website (www.makinghomeaffordable.com) you will need the following information for your lender to consider a modification:

• Information about your first mortgage, such as your monthly mortgage statement.
• Information about any second mortgage or home equity line of credit on the house.
• Account balances and minimum monthly payments due on all of your credit cards.
• Account balances and monthly payments on all your other debts such as student loans and car loans.
• Your most recent income tax return.
• Information about your savings and other assets
• Information about the monthly gross (before tax) income of your household,including recent pay stubs if you receive them or documentation of income you receive from other sources.
• It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable

How do I qualify for a mortgage modification?

The first call you make should be to yourlender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking about you can ask to be referred to one of the following departments (different lenders have different names for this department):

• Loss Mitigation Department
• Mortgage Modification Department
• H.O.P.E. Department

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government sponsored Home Affordability and Stability Program (HASP).

For a list of mortgage lenders and servicers with contact information your can visit www.HopeNow.org.  If Fannie Mae or Freddie Mac owns your mortgage you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

What is a Home Affordable Refinance?

1. You are the owner occupant of a one to four unit home.  
2. The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see resources in this blog)
3. At the time you apply, you are current on your mortgage payments (current means that you haven't been more than 30-days late on your mortgage payment in the last 12 months or, if you have had the loan for less than 12 months, you have never missed a payment)
4. You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
5. You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan.

What if I Don't Qualify, Can't Afford My Home and Owe More than It is Worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment you may want to consider a short sale, A short sale allows you to sell your home for less than what you owe and avoid foreclosure.

RESOURCES - HUD APPROVED COUNSELORS:

• ACORN Housing © http://www.acornhousing.org/
• Catholic Charities USA ® http://www.catholiccharitiesusa.org/ 
• Citizens' Housing and Planning Association, Inc. http://www.chapa.org/
• Consumer Credit Counseling Service of Atlanta ^TM http://www.cccsatl.org/
• HomeFree-USA © http://www.homefreeusa.org/
• Homeownership Preservation Foundation © http://www.995hope.org/
• The Housing Partnership Network © http://www.housingpartnership.net/
• Mission of Peace Housing Counseling Agency ©http://www.missionofpeace.com/  
• Mississippi Homebuyer Education Center © http://www.mhbec.com
• The Mon Valley Initiative http://www.monvalleyinitiative.com/
• Money Management International, Inc. © http://www.moneymanagement.org/
• National Community Reinvestment Coalition © http://www.ncrc.org
• National Council of La Raza © http://www.nclr.org
• National Federation of Community Development Credit Unions http://www.cdcu.coop
• National Foundation for Credit Counseling © http://www.nfcc.org/
• The National Urban League © http://www.nul.org/
• NeighborWorks® America http://www.nw.org/
• Neighborhood Assistance Corporation of America © (NACA) https://www.naca.com
• Rural Community Assistance Co. http://www.rcac.org/
• Structured Employment Economic Development Co. http://www.seedco.org/