Foreclosure is a legal process by which a defaulted borrower is deprived of the interest in the mortgage property -

The Various Reasons for Foreclosures are too many to write about in a short post - but some reasons include -

 

• Job Loss
• Business Failure
• Payment Increases or Mortgage Adjustments
• Divorce or Death Of A Spouse
• Illness
• Relocation
• Reduced Income
• Mortgage Fraud
• Predatory Lending Practices
• Market Conditions - Market Value Is Lower Than Mortgage Amount

Mortgage Defaults and Foreclosure Proceedings often represent never before position of circumstances that leave the borrower with a frightening and humiliating feeling which often leads to desperation.

People often consider that the sub prime borrowers are the ones defaulting on loans - which may be the case -

But more and more percentage of Prime borrowers are defaulting on mortgages or are in serious delinquency - 90 days or more past due or in the process of foreclosure - there has been an increase of more than three times starting in 2006 - 2009 - three times as many default prime borrowers since 2006.

So you can see it is effecting every aspect of American Homeowners -

To ignore this problem is to entertain disaster - there are solutions to the foreclosure ordeal.

A Short Sale happens when Market Conditions are flooded with properties on the market which places a downturn on property values - Market Value Of Property Is Lower Than Mortgage Amount.

Some of the Alternatives to to foreclosure are as follows:

• Refinance
• Loan Modification
• Sell and Bring Cash To Closing
• Deed In Lieu 
• Do nothing and just "walk away"

Most people find themselves without the solution of refinancing because the market value is less than the mortgage amount and there is no equity left in the property.

Loan Modification is a process which avoids refinancing and the lender agrees to recast the loan without refinancing - often for 5 to 30 years.

Borrowers need to present a "complete" package to the bank - often lenders give the advice to borrowers that they can "do it yourself" but then the bank denies the borrower the loan modification because of insufficient information to "approve" the loan modification.

Borrowers should seek professional loan modification help - to present the "complete" package to the bank for approval.

But often the loan modification is denied by the bank for whatever reason - the other alternative in a short sale.

Short Sales are the best alternative to the foreclosure process if the loan modification is not possible.

In a short sale, the bank (s) have not yet foreclosed on the property, which provides a window of opportunity to the borrower to sell the property in order to at least "partially" satisfy the mortgage amount owed to the lender(s).

Short Sales are considered preferable to foreclosure because short sales:

• Lessen the impact a foreclosure can have on the surrounding community
• Lessens the damage on the distressed borrower's credit

Foreclosures lower the credit score of the borrower of as much as 200 points -

Short Sales when satisfied only lowers a borrowers score as much as 50 points -

Also according to HUD guidelines for securing another mortgage -

Foreclosures stays on your credit report for seven full years and guidelines prevent the borrower obtaining another mortgage for seven years.

After a Short Sale, according to present guidelines borroers can obtain a mortgage after only TWO YEARS - big difference.

So there is life after a short sale after all - seek a professional who knows the short sale process before making a decision that can definitely alter your home ownership in America for years to come.

 

 

Nicholas Goglucci, PA., CRS
Certified Residential Specialist
Certified Luxury Home Marketing Specialist

e-Pro Certified

Re/Max ParkCreek

121,614 Associates in 6,960 offices in over 65 countries
Direct Line: 954-650-7800
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