Foreclosure or Short Sale – Sell My Home Fast

The housing crisis has caused a great deal of stress to homeowners in hardship, and has pushed more than one out of every seven of them into the path of foreclosure. However, there are other options available. These include:

• Short Sale
• Repayment
• Mortgage Modification
• Deed in lieu of Foreclosure
• Bankruptcy

The Result if Nothing is Done: Foreclosure

While foreclosure should not be an option for most borrowers in hardship, it is the inevitable outcome if action is not taken. A foreclosure simply destroys a home owners credit and will make it impossible for a borrower to qualify for most loans in at least five years or more. Most importantly, after a foreclosure happens, a borrower is still liable for the original amount they owe their lender in many cases. This means that in most states, lenders can come after a defaulted borrowers vehicles and other assets years after a foreclosure is completed. While foreclosure can seem like the easy and simple solution, it can also be the most costly to all parties.

But don’t despair, there are options to help you:

Short Sale

A more common method to avoid foreclosure has been to do a short sale. A short sale is for the homeowner who has encountered a financial hardship that has caused them to be late on mortgage payments or for the homeowner who foresees their hardship taking a toll on their ability to pay their mortgage in the future. In a short sale the lender will take a lesser pay off than what they are owed once the home is sold. This is not done as a favor to the borrower, but only for the lender to also avoid expensive foreclosure expenses and minimize future loss.

A short sale will allow the homeowner to stop foreclosure and save the huge impact a foreclosure would have on their credit. A short sale will typically recover from a homeowner’s credit in a short period of time and make them eligible to purchase a home again in only two years. In addition, in most cases the lenders will completely forgive the borrower of any deficiency or short fall in the money that they were originally owed. Lenders are very motivated to cut their losses with a short sale. There are also many cash back incentives offered to borrowers to complete a short sale.

It is important for homeowners to understand that they do have options available to avoid foreclosure and should immediately seek the guidance of a local short sale specialist or housing counselor as soon as they start to realize their financial situation could take a toll on where they are living.

Contact Indy Home Help for no cost assistance and guidance during this time of greatest need. Indy Home Help has proven experience with a 91% Short Sale Closing rate average vs. the National Short Sale Closing rate average of 21%. We will help people out of what can be very stressful situations and navigate for You the best process to take based on your individual situation.

Bankruptcy

Bankruptcy has been considered an option for homeowners who want to stop foreclosure. However; only in some states and situations can a bankruptcy be a foreclosure solution. Bankruptcy will not stop the foreclosure process but simply delay it if a homeowner cannot afford to continue with their mortgage payments. Filing for bankruptcy during a foreclosure can result in a damaged credit score, can be expensive and can only be filed once every seven years. A bankruptcy can not only affect a borrower’s current and future employment in many fields, but will also scar a borrower’s credit for many years to come. While a bankruptcy may seem like an easy way out, it should only be used as a last resort.

Deed In Lieu of Foreclosure

A deed in lieu of foreclosure is an option that can be available to a homeowner in default that is already in foreclosure proceedings. This option can allow the homeowner to deed back title to their home to their lender rather than continue with the foreclosure process. Lenders will benefit from a deed in lieu because they will not have to invest more time and capital resources in the foreclosure process and with potentially vandalized property should the home sit for a long time after the foreclosure process. While this may seem like a good option to many home owners in hardship in order to wash their hands of the situation, there can still be severe penalties. In most cases, the borrower is still completely liable for the deficiency (loan balance less proceeds from final property sale), and their lender can and will pursue collections years down the road. In addition, the negative impact to a borrowers credit and ability to purchase a property again in the future is nearly identical to a foreclosure.

Repayment Plan / Forbearance

An option like a repayment plan, also called a forbearance, is designed to allow the homeowner to pay back delinquent mortgage payments over a certain amount of time. Please note, forbearance is best in a situation when a borrower’s hardship was only temporary, and they are already on the road to complete financial recovery. If the hardship is still not completely resolved at the time the borrower enters into the forbearance, then another option mentioned below should be used instead.

Loan Modifications

Another option for the homeowner might be a mortgage modification. The homeowner can change one of the following:

1. Change the principal balance of the loan
2. Length of the loan
3. Interest rate.

When using this option, it is good to know that the homeowner can be in default, in foreclosure, in bankruptcy – late or current at the time the application – for a mortgage modification is made. Actual principle reductions in the mortgage balance are extremely rare and occur in less than 1% all loan modifications, with the vast majority of loan modifications still leaving borrowers still in a negative equity position. Most successful loan modifications will usually bring the homeowners mortgage payments down while prolonging the loan term.

Historically, loan modifications are offered as a temporary solution to borrowers, similar to putting a band-aide on a hemorrhage. In most cases, this option only prolongs the inevitable downward path that financial hardship brings. In recent years, many loan modifications have become good permanent solutions to borrowers whose hardship is temporary and who can easily afford a slightly lower payment.