Things To Consider When Facing Mortgage Difficulty
If you are a Riverside County homeowner in a distressed financial situation, you should review the five main options that are available to you to resolve your mortgage difficulty. You should review these options with your tax and legal representatives as there are potentially serious consequences that may apply to your personal situation. A real estate professional can only advise clients on real estate matters, not matters of taxation or law.
1. A Loan Modification is often a homeowner's best option, especially if the reason for the distressed financial situation was due to a temporary income loss or if the loan payments have reset due to expiration of a trial interest rate period. Homeowners should explore options directly with their lender - many are much more willing to help than they were in the past. Be prepared to provide a significant amount of paperwork including paycheck stubs, bank statements and a hardship letter. Loan modification companies are available to help but be aware that there are many scams out there. If you need assistance in getting things done, often a non-profit organization such as NACA may be a good alternative.
2. A Deed in Lieu of Foreclosure is basically an agreement to hand-over the property to the bank without the bank needing to go through the entire foreclosure process. In our current mortgage crisis, this option has not been pursued often as it does not protect the mortgage holder from any other liens that may be on the property. It may be a practical option if the home value and the amount owed are almost the same or if the value of the home is slightly greater than the amount owed.
3. A Bankruptcy will almost certainly result in a homeowner being able to stay in the home for an additional period of time and may be the best option if there are other significant debts. However unless there are fundamental changes to the mortgage brought about in the bankruptcy such as a stripping away of a junior lien, the homeowner may find the bankruptcy to only be of temporary relief.
4. A Short-Sale is a sale process where the homeowner will attempt to sell their home and negotiate a 'short-payment' of the existing mortgage on the property. Often a homeowner's best option, after exploring a loan modification, is to pursue a short-sale.
5. A Foreclosure may in some situations be the homeowner's best option, especially if there are protections against a deficiency judgement. Sometimes homeowners don't seriously consider this option until after working on a short-sale and then finding out that the mortgage holder or a mortgage insurance company wants a promissory note or cash-payment as part of the short-sale process. A foreclosure will generally hurt a homeowner's credit score harder and for a longer period of time than other options.
As a real estate professional, I can help homeowners who are in financial difficulty and want to pursue a short-sale option. As a Certified Distressed Property Expert (CDPE), I am in touch with other professionals throughout the country to stay on top of the most current practices and policies of the major banks.
If you own a home in Riverside County or nearby areas of southern California and are in a financially distressed situation, please contact me at 951-898-8912 to discuss your situation. No obligation, no cost, just an honest assessment of how I might be able to help!