TED SHOOP - Atlanta Suburban Real Estate

Hi Sandra,

Since it sounds like you wish to stay in your home, you may want to consider doing a loan modification, loan restructuring or loan workout with your existing loan servicer. Finding employment (and quickly) will be your priority and key to success since the loan servicer will want to see that you have the financial means to continue to make payments once the terms of your loan are re-cast.

You can attempt to negotiate directly with your loan servicer; however, many homeowners feel intimidated or uncomfortable doing this themselves. There are companies that offer loan modification services. You may also find that some Realtors are offering this as a service (licensing requirements vary from state to state). Be cautious of companies or individuals demanding full payment up-front. Look for those who either charge a graduated payment for various steps in the process or better yet one that only charges you a fee if and when the loan restructuring is approved. - Tue Jan 20 2009, 17:11

Jimster,

Best case scenario, you are probably looking at 18-24 months before you can qualify for an FHA-insured loan. Your particular case may vary depending upon how your purchase and sale agreement was structured and how the provisions to address the deficiency amount with your loan servicer were written. It also depends on how your loan servicer reports the deficiency to the 3 major credit services. You will want to pull yours to check & see. In some cases, it may be inadvertently reported as a foreclosure, in which case, you will want to have such corrected.

One final comment. The rules in real estate, banking and mortgage lending continue to be in a state of flux. The rules yesterday are different from today which will likely change again tomorrow. If your plan is to buy another home, I suggest that you choose a trust loan officer to counsel and guide you on the path of credit repair and the steps you'll need to take to qualify for financing once again down the road. Also consult with a full-time professional Realtor who knows the area of interest to you so that they can provide guidance on market values when it comes time to make an offer on your next home. Best wishes - Ted - Sun Jan 18 2009, 15:30

Virginia,

Since I am not licensed in your home state of MA, this really is a question for your buyer's agent or an attorney. However, the contingency you described sounds similar to a financing contingency that we use in our purchase and sale agreements in Georgia. Read your agreement closely to ensure that you are within the time limit for making notification to terminate your agreement (which typically must be in writing). With respect to disposition earnest money and/or down payment money, again check with your agent or a real estate attorney. Usually, there are provisions in the contract that define who is holding this money and how this money is dispersed. The holder of the money will most likely need to follow a specific procedure to notify the parties before your earnest money or down payment can be refunded. In some cases, all or part of the earnest money or down payment may not be refundable. Consult with your buyer's agent or a real estate attorney. Best wishes - Ted - Sun Jan 18 2009, 15:13