I can’t afford my South Florida Home….Should I let it Foreclose?

What’s the Difference between a Short Sale and Foreclosure? Are there any other options?

This is the burning question that many homeowners in South Florida are asking.

Should I just let my home foreclose or is there something that I can do to stop it.  Well there is.  

What is a Deed-In-Lieu of Foreclosure?

This is also known as a friendly foreclosure because the homeowner gives the deed back to the bank.  This prevents the bank from going through the long foreclosure process.  This is something that has to be negotiated with the bank. Normally, servicers require a borrower to make an effort to sell the home through a short sale before they agree to accept a Deed-In-Lieu (DIL).  Deficiency judgment is not pursued. This is normally used in the case of one mortgage and no liens on the property.

I want to keep my home.

“But what if I want to stay in my home”? You ask….. “I’ve tried to get a Loan Modification and the bank keeps turning me down”.  Well, a short sale is not your only choice.  You can ask for a Reinstatement. If your missed payments was due to a temporary hardship and you can now pay your mortgage then you have the option to get your mortgage reinstated right up to the time of the bank sale.

Two ways to get your mortgage reinstated:

(1)    Payment in Full – Pay all missed payments, late fees and legal fees due
(2)    Forbearance or Re-Payment Plan – The lender allows you to pay the missed payments over a period of time – normally this does not reinstate the mortgage until the payment plan is completed (past due amounts paid in full). Payments in the payment plan should NOT be missed!

Should I file for Bankruptcy?

Bankruptcy may stop a foreclosure and allow a homeowner to keep their home after sorting and reorganizing their debt, however if the homeowner is still not able to make payments for the home after the bankruptcy the foreclosure will happen anyway.
A short sale is nearly impossible after bankruptcy proceedings have begun.   Make sure that this is really what you want to do and explore all other options prior to filing for bankruptcy.

What is a Short Sale anyway?

When a borrower is allowed to list and sell their property by the servicer (bank) knowing that the sale proceeds may be less than the amount owed on the mortgage.
Simply put: A borrower owes more on their home than the current market value.
A short sale happens when a negotiation happens between a mortgage company (or companies) and a homeowner to accept less than the full value.

Short sales must be arm’s length transactions.

What are the consequences of doing a short sale vs. a foreclosure?

You can find a detailed chart of the Homeowner Consequences here.

Summary: The Ways to Prevent Foreclosure

Loan Modification: Modify the Original terms of the Loan

Refinance: A New Loan with a reduction in monthly payments

Reinstatement: Bring the loan current

Forbearance: Temporary re-payment plan

Sell the property: Pay difference or use equity to pay off

Rent the property: Loan must be made current

Short Sale: Negotiate with bank to accept sale less than the loan amount

Deed In Lieu of Foreclosure: Friendly Foreclosure

Bankruptcy:  Stalls foreclosure but will not prevent it

As you can see, Foreclosure is not your only option and even if you have received a letter from your mortgage company stating that they are going to foreclose on you there is still time.  Here in South Florida we see more homeowners staying in their home for long periods of time (sometimes over 18 months) before they are foreclosed on, however this is NOT always the case.  

If you have been in your home for a long time without paying your mortgage and feel that it is too late for you, it is not, you have up until the bank sale to do something!

If you are a South Florida Homeowner facing foreclosure living in Broward County and want to list your  home for sale as a Short Sale contact Tiffany today at 954-257-5030. Don’t let time run out on you.

Tiffany L. Young, CDPE – Certified Distressed Property Expert
Short Sale and Pre-Foreclosure Specialist
Serving Residents of Broward County Florida
Specializing in Davie, Weston, Plantation and Southwest Ranches
www.TiffanyLYoung.com