Since earning my certification as a CDPE (Certified Distressed property Expert), I have had pretty good success helping people get through the short sale process. It's hard to see someone lose their home, but most of the time it's much better than a foreclosure.
When meeting with clients, the first thing that I try to do is to contact the lenders on the client's behalf, and see if there's any hope for a loan modification. It requires the same amount of paperwork that a short sale does, and sadly, in most cases it just doesn't work. Usually, when the loan is converted to a conventional fixed rate from a previous interest only loan, the payment amount is very close to what they can't pay now. I am so happy to report that there are exceptions, and today was a wonderful day for one of my clients!
These folks had purchased their home back in 2004, paid top dollar, and also took advantage of one of the "creative" finance programs just becoming popular. Things were good; they paid their mortgage and even made some substantial improvements to their home. Their small business, a local restaurant, was doing great, and all was well.
Then the loan started to reset, the rate started going up, the economy went upside down, and now the restaurant was only doing 1/4 the business it had done in 2004-2005. All of a sudden they found themselves in trouble and didn't know what to do. They contacted several people and were told they were probably going to lose their home. Out of fear, they quit communicating with their lender and started to ignore the collection letters. When I met with them a little over a month ago, the situation looked pretty bleak.
They agreed to gather all the information I asked them to and even though they were in pre-foreclosure, the lender had not set a date for the sale of their home. I submitted their packet along with a very honest letter outlining their hardship, and today, Wachovia agreed to modify their mortgage! They are going to REDUCE the principal by 18%, and convert their adjustable loan to a 40 year fixed. The initial rate for the first year is only 3.5%, and it will increase in small amounts for the next four years, ending up at a fixed 5.5%. The payments will be affordable, and my clients get to keep their home! This is truly a win-win for everyone involved, and makes me feel incredible to be able to have helped them. They have tried to pay me over and over for my assistance, but like I told them, just send me all your friends and I'll be paid in full!!!
If I could offer any advice to homeowners that are having trouble, it would be to get some help right away, don't wait, and don't just ignore the situation and hope it will go away. There are definite alternatives to foreclosure, and most of them are a better choice!
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