When you can no longer make your mortgage payments, you have three options:
1. Loan Modification: If your loan payments are too high, loan modification might be an option for you. For example, you could qualify for a lower interest rate. Loan modification is a solution that enables you to keep your house without negatively impacting your credit rating.
2. Short Sale: In a short sale, your bank or lender may agree to let you sell your home for less than the balance owed on the loan in order to help you prevent foreclosure and help the lender avoid a larger loss on your loan.
3. Foreclosure: In the event that a short sale or loan modification is not the right option for you, the next step is foreclosure. Foreclosure is a process whereby your lender takes over your property for nonpayment of the mortgage. In California, this can occur after two or three months of delinquent mortgage payments. The timeframe varies depending on the lenders guidelines.
Regardless of your situation, you need someone who can help you understand what your choices are, help you take the step, and work with you to negotiate with the right lender to get the best deal. You may also want to discuss the options with an attorney to see how the option you choose can impact you and your credit.
These financial strategies are complex and you need someone you can trust. Someone who has your best interests at heart, and who has the experience, expertise, and the focus on delivering excellence that will move this process along for you as quickly as possible.
If I can be of any help in discussing this further, you can call me at 510-279-9580
Short Sale â€“ To hold a short sale on your property is if both the primary lender and the HELOC lender agree. Part of the short sale agreement will probably be required to pay a certain amount to both lenders in order for your account to be considered closed. In addition to the money recouped by the sale. Your credit report will state that the account was settled but that the full amount was not paid. The damage to your credit can be significantly less than the damage caused by a foreclosure.
Short Sale with Incentive to HELOC Lender â€“ It can be difficult to get a HELOC lender to agree to a short sale; chances are the lender will not receive money from it. A lot of HELOC lenders like to keep collecting monthly payments for as long as possible. If the primary lender wants a short sale, it may offer the HELOC lender an incentive. Sometimes the HELOC lender is paid between $1,000 and $4,000 to sign off on the sale.
Primary Lender Forces Foreclosure â€“ If your property is foreclosed upon, your primary lender will be paid everything it is owed with the money it takes from the sale. It may also use some of the money for expenses related to the sale of the home. Since the HELOC loan is subordinate to the first mortgage, the HELOC lender will be paid with any remaining money. If the HELOC lender is not paid the full amount owed on the line, the HELOC becomes an unsecured lien collectable via a deficiency judgment. The lien is no longer on the property; instead, the borrower is liable for everything owed. Through the deficiency judgment, the HELOC lender may be able to recoup the money from you by garnishing your wages or even putting a lien on any property you buy in the future. A foreclosure will also show up on your credit report, making it extremely difficult for you to get credit for the next 7 years.
There are loan modifications available, short sale today that can help you. Contact a good Realtor to help you sort through the maze. Hang in there.
I have to agree with Mr Polack brings up with Marilyn. The upfront payment of approximately $1,600 should be at the most $512; max appraisal price of $500 + the credit charge of $12. If you can get by with a drive-by appraisal in today's market, then the $512 number should drop down to $87 at best. If you have a refinance, the rest of the fees would be reasonable, imo.
I am not against anyone earning a living, but be wary of exorbitant upfront fees promising you what you want to hear.
Good luck, Tyrone.
Our Group Fund will purchase your loans from your lenders and give you a new loan back to you at 90% of the current appraised value. It will be a 30 year fixed loan at approximately at 7.5% with a 3 year prepayment penalty. Your new mortgage payment will be $7.00 per $1,000 of your new loan. If your new loan is $200,000, then your monthly payments would be around $1,400 per month (200 times $7.00 = $1,400).
There are four basic requirements:
1. Your loans must be 25% higher than your value of your property. (Take your total loans times 75%. Your appraised value must less than that).
2. You must have a 50% debt to income ratio with the new mortgage payment. (All your monthly debts have to be less than 50% of your gross monthly income. That includes your new mortgage, taxes, insurance, car payments, credit card payments, etc. Any bill that you are required to pay monthly).
3. You must fill out and supply all the paper work required for a normal full documented loan. Everything will be verified. Your credit must be filed in the paperwork, but the credit score does not matter.
4. You must pay $1,595 up front. This is the total for everything. This is for:
â€¢ Drive by/AVM appraisal - $75-$150
â€¢ Full appraisal - $250-$500
â€¢ Title on new loan - $400-$600
â€¢ Credit reporting - $12
â€¢ Processing/misc. the remaining
Century 21 Real Estate
If you can afford to keep paying, you should continue to do so.
If you can not afford the payments, you should try to have your loan modified.
If you can not afford to make any payment at all, you might want to consider a short sale as it will hurt your credit for a lesser time then a foreclosure.
I have been provided free assistance and loan modifications for quite some time now, please feel free to call or email if you have any further questions. Good luck to you dear.
"Straight answers every time"
I know it's cold comfort, but you are far from alone. Every situation is different, usually complex and fraught with potential pitfalls. Realtors can be great sources of referrals in this situation, but truly can't (shouldn't) advise you on what is in your best interest. First, I would speak to a tax advisor, ideally someone with an EA designation. They can spell out for you what the tax ramifications you will face depending on what course of action you take. Second, I would sit down with a real estate attorney and get their advice. Once you are truly aware of what you are "up against" and can make an informed decision, you consult a Realtor IF a short sale is in your best interest. The first thing your agent would likely do is determine from their experience or that of other experts we work with how likely it is that your lenders will "play ball". We can list the property, negotiate terms of your short sale and be there to support you through the process. What a responsible agent should never do is tell you what is in your best interest. If you would like names and numbers of tax advisors, real estate attorneys or any other resource to help you in this tough time, I'd be happy to help.
There are obvious ethical issues with walking away.
There are practical issues too....your credit will be shot - at least for 3-5 years.
Check with an attorney to find out the legal ramifications. They should be able to give you a clear picture of what options you have and the true COST of walking away.