Short Sale, Deed in Lieu, Loan Modification, Foreclosure, HAMP, HAFA in California and what they mean to you.
Under the HAFA program you have the option of doing a Short Sale or Deed in Lieu. The lenders are required to give you at least 120 days to market the home and obtain an offer. The lender does not have to give you more time and you are required to follow the guidelines set forth by the lenders. Many lenders are closing short sales sooner than 120 days so be prepared to move. The only thing I have seen that has been extending the short sale time lines is Mortgage Insurance and more likely to kill the deal.
A Deed in Lieu is when you sign the deed over to the lender and walk away from the house. The lender has to give you permission to do so and it has to be a clean marketable title. That means no other liens on the property, second mortgage, mechanics lien, taxes are paid, etc.
According to current FHA guidelines you can buy another home 2 years after the short sale. If you do a Loan Modification today with current mortgage say $500,000. Homes increase 5% per year it will take you approximately 9 years to break even (it will take you that long to pay down a $500,000 so you could sell at market value), you would have about $3,000 after commissions and other fees. If you Short Sale and buy a new home in 2 years at today's prices plus 5% growth for 2 years. You pay approximately $380,000 with 5% growth per year at the end of the 9 years in the example below you would have approximately $150,000 equity.
Short
Comments(1)