Owe More On Your Home Than It Is Worth? Facing Foreclosure?

Real Estate Agent with Berkshire Hathaway HomeServices - C. Dan Joyner 21498

Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to residents for foreclosure are many, including but not limited to short sales.


A short sale is when a homeowner owes more on their property than it is currently worth, and then they hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.


The simplest solution is reinstatement, however it is often the most difficult to do. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender's approval and will 'reinstate' a mortgage up to the day before the final foreclosure sale. For obvious reasons, this one doesn't happen often.

Another option is forbearance or repayment plan which involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

There is also mortgage modification which involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These typically result in a lower payment to the homeowner and a more affordable mortgage. This is a great option if you can qualify for it.

A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage.  This one works well in some resort type areas where the rental amounts are fairly high.

There is also an option called Deed-in-Lieu of Foreclosure. Also known as a "friendly foreclosure," a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property.

Next there is bankruptcy. Many have considered and marketed bankruptcy as a "foreclosure solution," but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.  The homewoner must pass qualifications similar to those when they purchased the home.

Service members Civil Relief Act (military personnel only) is another option. If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Service members Civil Relief Act. The American Bar Association has a network of attorneys that will work with service members in relation to qualifying for this relief.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Call us for an evaluation of your individual situation, property value, and possible options. Understanding your options now could mean all the difference in the world.

We can help. Give us a call today at 864-225-1205.

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If you are looking to buy or sell a home in the  Anderson or Greenville SC real estate areas, visit our website at www.SheilaNewtonTeam.com for tons of great information.


Sheila Newton   
Sheila Newton Team 
Berkshire Hathaway HomeServices -
C. Dan Joyner, Realtors
864-225-1205 (direct)
864-940-6377 (mobile)


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Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Hi Sheila, Great way to inform the public, so many people are confuse by short sales.

Jun 02, 2011 03:01 AM #1
Mona Gersky
MoonDancer Realty, Dillsboro,NC - Sylva, NC
GRI,IMSD-Taking the mystery out of real estate.

Bookmarked and suggested! That has to be the most concise explanation I've ever seen laid out. Just great.  Thanks for taking the considerable time to post this.

Jun 02, 2011 03:30 AM #2
Jill Sackler
Charles Rutenberg Realty Inc. 516-575-7500 - Long Beach, NY
LI South Shore Real Estate - Broker Associate

Super summary of all the options available to someone experiencing financial distress. Civil Relief was new to me.

Jun 02, 2011 09:02 AM #3
Sheila Newton Team Anderson & Greenville SC
Berkshire Hathaway HomeServices - C. Dan Joyner - Anderson, SC
Selling the Upstate since 1989

Will - they sure are.. I just finished the CDPE course and learned some stuff myself.. I have been doing short sales for several years and thought I knew a lot, but you never know everything!

Mona - Thanks... I appreciate that

Jill - There are so many now!! I think it is great we have an option for vets!

Jun 02, 2011 01:45 PM #4
Patricia Feager, MBA, CRS, GRI,MRP
Selling Homes Changing Lives


I'm clicking suggest because your post is clean, clear, and concise. It's exactly the type of information that the public needs to know in words that a trusted and experienced REALTOR® can share with prospective sellers who need our help.

Not every REALTOR® is competent enough to know how to best serve their clients and we take an oath to serve the people in what we are knowledgeable to do, and not to practice without having acquired the skills. Having earned the CDPE course puts you ahead of the pack and people who need help in this area should consult an expert like you.



Jun 02, 2011 02:16 PM #5
Toni Weidman
Sailwinds Realty - Trinity, FL
26 Years Selling Homes in New Port Richey, FL
I have a client who tried to do a DIL. The lender wouldn't allow it; insisted on a short sale. So we did a short sale listing and 6months later, its still for sale.
Jun 03, 2011 12:50 AM #6
Dan Edward Phillips
Dan Edward Phillips - Eureka, CA
Realtor and Broker/Owner

Good Morning Shelia, an excellent menu of options for the home owner in trouble to consider!

Jun 03, 2011 11:25 PM #7
Laura Giannotta
Keller Williams Realty - Atlantic Shore - Little Egg Harbor, NJ
Your Realtor Down the Shore!

You spelled it out, straight forward and simply.   

Jun 04, 2011 02:00 AM #8
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