Eeek. My Home Is Going to Auction Next Week. What Can I Do?

The question about what a borrower can do in order to avoid foreclosure is one that people ask me all the time—maybe even twice daily. Lucky for many of us, tomorrow, (New Year's Eve), there are no foreclosures as city and county public offices in many areas are closed. Many borrowers contact me when they are just a day or two away from foreclosure. And, before you read any further, please be aware that if you want to avoid foreclosure, it is very risky to wait until the foreclosure date is looming to address your options.

The most common type of call that I have received in the last few weeks is from borrowers who just learned that they were declined for a loan modification. It seems that certain lending institutions are setting foreclosure dates in the very near future for individuals who have been formally declined for a loan modification. Borrowers are frustrated because they have left ‘short sale’ as an option, but with a foreclosure just around the corner, a short sale is tough to manage when they learn that the loan modification has been denied at the last minute.

In order for a mortgage lender to possibly consider a short sale, a full short sale package (with an offer and a listing agreement) must be at the bank and in process. Generally, it takes a little while to pull all this information together. First, a borrower would need to list his or her home for sale. Then, an offer would need to be obtained and executed. Then, this stuff (and the rest of the short sale package) needs to be sent to the bank.

For most of the major lending institutions, the package is faxed to the bank. These faxes take a few days to process. So, if a short sale package were to be sent to the bank today, it may not even get where it needs to go until Wednesday of next week (or later).

The good news is that if you hire a qualified Realtor® who is experienced with short sales, there is a good chance that this individual can help you to get your short sale approved. But, to make it easier on all parties, try your best not to avoid waiting until it’s too late.