Information Every Homeowner Needs
What to do if You are Unable to Pay Your Mortgage
1. Contact Your
Mortgage Company Immediately!
(Ideally, contact them
before
you are late making your payment; the longer you delay, the more difficult it is
to recover)
Don’t Delay! If you missed payments because of a temporary setback such as an
illness or injury, your mortgage company may be able to provide you temporary
relief in the form of:
- Forbearance: modification of the amount of the mortgage you pay
- Reinstatement: payment of amounts due by a specific future date
- Repayment Plan: gradual repayment of the amounts past due in addition
to your regular
monthly payment
- Loan Modification: changing the original terms of the note to make the
payments more affordable
2. Contact a Housing or Credit Counseling Agency (choose these agencies with
diligence)
3. List Your Property For Sale
Investigate this option especially if you are behind in payments because of job
or income loss, divorce, or some other long term or permanent hardship. The sale
price may cover the delinquent amounts, and the remaining loan. By selling, you
may be able to preserve or improve your credit rating more quickly. In addition,
you may be able to avoid potential tax issues.
What NOT to do
Nothing!
Failure to act could cause long term damage to your ability to obtain a loan,
rent a place to live, and more.
What Every Property Owner Needs to Know About
The Process of Foreclosure (non-judicial)
1. The lender (or the lender’s trustee) files a ‘Notice of Default’ (NOD)
with the County after the property owner fails to make two or more payments.
The home owner has at least 3 full months after the ‘Notice of Default’ is filed
to remedy the situation.
Some possible remedies include:
- reinstating the loan
- setting up a repayment plan
- finding a new loan; be sure to say within your means; do not let
anyone convince you to exceed your ability to pay
- finding a buyer
- finding someone to assume the loan
- giving the lender the deed in lieu of foreclosure
2. The lender (or trustee) files a ‘Notice of Trustee Sale’ with the County
on approximately day 91 after the NOD is filed. This notice states that the
lender will sell the property by public auction at the Courthouse on a specific
date & time (usually within the next 3 to 5 weeks).
If you find you are unable to make a mortgage payment, call your mortgage
company right away! If you do not find a ’sympathetic ear’ on the first call,
call back, or ask to speak to someone else!
Beware of those who target people in financial distress. It may not be necessary
to sell your home,…even if you owe more than current market value. Once the
Notice of Default is filed, you have at least 3 months to determine which remedy
best fits your situation. Do not allow anyone to:
- rush you into making a decision
- charge you a fee to assist you (such
as ‘fix’ your credit or cure the foreclosure)
- buy your home at a huge
discount
- convince you to allow a potential buyer to negotiate with your
lender
- sign over or give control of your property to anyone
Do none of these things. Seek the advice of a real estate, tax, or legal
professional. Seek someone with your best interests in mind. Realize, however,
that the sooner you take action, the greater the opportunity to bring about the
most favorable outcome possible.
-
Think you won’t be able to sell your property because you owe more than
current market value?
-
Fear you won’t be able to attract a buyer in this market?
There are alternatives! One is a proactively initiated Short Sale. The Short
Sale can present an extremely beneficial alternative to foreclosure for many
home owners.
What is a Short Sale?
A short sale is an alternative to foreclosure. Also called a ‘negotiated
payoff’ or ‘short payoff’, a short sale is an agreement between the lender and a
home owner which allows the sale of the property to a buyer for less than the
total amount of the loan(s), other liens, and costs of sale (commission).
Basically, the lender(s) agree(s) to accept a payoff which is less than the full
amount of the borrower’s debt.
The benefits of a short sale are numerous. The home owner will avoid
foreclosure. A foreclosure will remain on the owner’s credit record for up to 7
years, and will affect all creditor decisions during that time (including auto
purchases, renting a place to live,…). A short sale will allow you time and a
better credit record; both of these should enable you to find a new place to
live (on your own terms instead of facing an eviction). Borrowers may even be
able to negotiate how the lender will report the short pay to credit reporting
agencies. Your individual circumstances may allow forgiveness of any remaining
debt. Taxes become a particular area of concern when the loan in default is a
second loan or a refinance.
A short sale is also an advantage to the lender. Lenders are responsible to
other entities who lend them the money they loan. A foreclosure, generally
speaking, nets the lender less money (he now owns a vacant home and has to pay
expenses for maintenance, management, utilities, taxes, possible vandalism,
etc.). The home is now a nonperforming asset in the lender’s investment
portfolio, making the lender less credit worthy. For this and other reasons,
lenders are particularly anxious to have home owners participate in a short
sale.
The sooner the short sale process is begun, the better the chance of a
positive outcome. Unlike a routine property sale, there are some very specific
steps that must be taken before, or at least simultaneously with, placing the
home on the market. It is important to realize that the lender pays the costs of
sale in this process; the lender pays the commission, title fees, repairs, etc.
If you have 2 loans (a 1st and a 2nd), you may need help to figure out
which lender to contact. It may not be the one who filed the NOD.
To find out more about the
process or to get started on a short sale,
contact Carol
For Questions or Assistance
Call Carol: (530) 671-8136 or
email:
Carol@CarolTucker4RealEstate.com
Consultations are without fee or obligation
&
Your Best Interest is Foremost
Sellers: Any action taken may have accompanying tax consequences. Be sure to consult a
qualified tax or legal professional regarding the tax consequences attendant
with each option.
Prequalify for a Short Sale
Completing this form allow me to prequalify you for a possible short sale
proposal to your mortgage company. Ultimately, your mortgage company will
make the final determination regarding your request for a discounted payoff -
"Short Sale". There is no guarantee that your mortgage company will
approve your proposal, but I am here to help. I can assist you in
obtaining approval, but the final decision is made by your mortgage company.
It is to your advantage to be pro-active. Another very important
additional step (one not to be overlooked) is to consult a well qualified tax
advisor. The advice of a competent tax professional is very important.
My goal is to offer assistance and, by working within your individual tax
situation, to bring the foreclosure issues to the best possible resolution.
We Are Here To Help
For Buyers: Receive Short Sale Info by Email
Qualified home buyers are necessary for the completion of a short sale. Here
is an excellent opportunity to give financial assistance to someone who really
needs it, and at the same time, perhaps, enhance your investment portfolio. If
you are looking for the opportunity to purchase a well priced home by making an
offer to an owner or lender on a property that is in default or foreclosure (or
is already owned by the lender/bank), I invite you to complete the form below.
Let me know what type of property you seek, in which areas, and I will do my
best to find that property.
