Ask about the Housing Rescue Bill. Please, Please do as much research as possible before you accept any loan. If you don't like an offer turn it down. DO NOT put yourself in another bad situation.
Despite what people tell you, Short sales do affect your credit negatively. But if your payments are already behind then your credit is hurting anyway. Don't be afraid to ask for help. Good luck.
Please call me if you have any further questions or if you think you are ready to make a move in Real Estate.
All the best,
Coldwell Banker Star Realty
BRE Lic #01456982
Here are your options :
a) Court in a Judicial State and fight them based on Legal Standing to foreclose. You will spend legal fees, to buy time, but not necessarily win. You save your money during this time and build a large cash cushion using the mortgage payments you are NOT making. You are credit damaged for 7 years, but might fix in 3 years.
b) Short sale and face a deficiency judgement , or they'll forgive the debt, because you are insolvent, and you get a 1099c for the difference reported as income. So now you owe to the IRS. So a loss on their books is treated as ordinary income on your books. Think about that for a min. Let's say owe $340,000 but can only sell for $200,000. That's a whopping $140,000 difference you owe. Can't pay it? ok, fine. it's income. Now go pay uncle Sam 31% of $140,000 in one shot. Can't do it? Ok, declare bankruptsy. Now you have a double whammy,a short sale which is treated as a foreclosure and a BK all combined. So, debt forgiven by them, is considered income for you, the borrower, just as if it is from earnings.
So this law :http://www.irs.gov/individuals/article/0,,id=179414,00.html
is expiring in 2012. So if you short sale, do it NOW!!! You only have 6 months left until Dec 31st 2012.
c) Do a loan modification. Hurt Credit during the trial period, but it becomes ok after that and becomes perm. It's the lesser of all the evils.
Your credit is in ruins right now anyhow. Don't focus on credit. Get your finances in order, save the house, reduce your other debt and rebuild a cash cushion. In 3 years your credit will bounce back. But, focus on saving the house for now and worry about all else later. Keep strong. it's a tough road ahead in dealing with your Servicer.
I had a loan modification through Chase bank that my credit took a serious hit for. I was instructed to not make payments on this loan during the modification process and I found out several months later that unbeknownst to me, they reported the non-payment on my credit report as deficiencies. This was never disclosed to me on any documentation and I wonder how many other people have had the same experience. Now I'm being told by other lenders that I will have to wait up to 3 years before I can buy again. My credit prior to this, was decent. I don't think this is fair and I feel that if this is a normal practice with Chase, that they are being very deceiving to their already hurting customers. This only ensures that the customer stays with Chase because they won't even be able to refinance to get out from under the Chase "umbrella". What can I do?
I believe this is done so that people were not going after mods that did not really need them,.. in other words the bank was going to be taking a hit and they expected the borrower to take one as well. While a Loan Mod is certainly a better solution than a short sale or a foreclosure,.. it does not come without cost.
The only caveat is they will report to the credit bureaus as "CO Loan Modification under a non government modification program. Neutral impact on credit score." When I called Equifax, they said most loan mod comes with "late payment" because the new monthly amount is lower than the original and that will damage my credit score. Citi told me that since I'm still paying for the same loan, as long as I'm current, they won't report me as late. In fact, I can pay more than the basic amount + more. Bottom line - should I trust Citi in reporting me as current after I accept the offer?
Granted, this is a new program that just started in 12/1 so not everyone has all the info.
I was told by Wells Fargo that during the Trial period of 3 months, which is required. They would put a stop on credit reporting and not show late, slow, or partial payments. In month 4 the program goes permanent at wich time the payments will reflect on the credit report as full and on time.
Has anyone else heard of this?
But, what you should consider the benefits of a loan modification. It will really change the terms of the contract and get the interest rate lower, so you will save a lot of money to make a credit restoration.
Consider for and pros, and think about it.
It can be a trade off reduced payment for having to repair your credit after payments changes take place. If the mod does not get approved it is almost like digging a hole that is hard to get out.
First Weber Group
Certified Distressed Property Expert
If you are going to lose you home without the modification,.. then do it,.. if you are able to make the payments you agreed to,.. don't
Not necessarily. A modification in and of itself does not hurt your credit, however, missed mortgage payments do affect and harm your credit standing. I suggest you contact my rep at AALMG through their website, and he will be able to provide you with any information you may need.
Hey Kids, a Loan "Mod' is part of a relief plan or work out for a loan seriously in arrearsâ€™. Ahhhh work out, seriously in arrears. ...sooooo delinquent.....ummmmm derogatory credit already reported so question is rhetorical.
Damage is already done!
Why by the way would anyone want to hire or negotiate a Rip Off Plan , (I mean work out plan?). Under the new legislation for lender ethic's and HUD mandates for foreclosure solutions, THEY MUST OFFER YOU A WORK OUT PLAN. And Here it is critters.
â€œTake and bake all the accrual due and divide out by so many months. Add it to the current payment So a $1,000 payment goes to $1,250 if you have $1,000 in arrears and were to pay it back over 4 months. Ahhhh I canâ€™t afford my current payment so let me think about this ingenious idea.
If you canâ€™t afford the loan due to an adjustment make a claim for predatory lending. Get your loan cut in half. Ahhhh now that's a cram down modification program I like!
What affects your credit standing is whether or not you are current.
In most cases a lender will be looking at your ability to pay and the reasons why now you cannot afford to pay the mortgage for a loan that originally your were qualified.
As long as you are current, you should be fine. A loan mod is better than a short sale or a foreclosure.