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

Nicole,

A short sale typically occurs when the owner of a home owes more on the mortgage than today's fair market value of that home and the bank or lender approves the sale of the home for less than what is owed on the mortgage. Short sales can often be a better value and hold more benefits to a home buyer than a HUD or bank-owned property (the seller must sell or lose the home to foreclosure, the condition of the home is usually very good to excellent, and you have access to historical information about the home since the present homeowner is part of the transaction).

The seller's loan servicer (the company that owns the first, second, and/or home equity line of credit (HELOC) mortgages) must approve the price and terms of the sale. Timeline to complete a short sale transaction is usually 30-60 days and in some cases longer. If you are obtaining financing to purchase a short sale home, you are not under any obligation to use the existing loan servicer (although in some cases, you may get some preferrential treatment through a slightly lower rate, discounted closing costs, etc.).

I recommend that you ask your buyer's agent, family & friends for referrals to trusted loan officers in your area. Make application and get yourself pre-approved for financing. If you are going to be shopping for a short sale, I would speak to your loan officer and find out if they have any limitations or restrictions related to them funding such properties. Best wishes - Ted - Sat Jan 17 2009, 12:03

One more thing I forgot to mention, Terry. If you have never done it before, you must plan a road trip on a motorcycle or in a convertible and drive into the Keys from South FL. It is sure to thaw your blood and warm your spirits after enduring the brutal Indiana winters. Have a blast! - Ted - Sat Jan 17 2009, 05:37

Terry,

First, congratulations on operating a growing business despite the state of our economy. Regarding your relocation plans, there are a number of ways in which to handle such a transaction. The types and terms of loans will vary from state to state. I highly recommend that you speak with family & friends in the Dade City FL area and ask for a qualified referral to a loan officer at either a bank, mortgage lender, mortgage broker or credit union.

You will also want to select a full-time professional buyer's agent or Realtor who knows the area you are considering to call your new home. An experience Realtor will know how to structure offers with a contingent on sale clause that will protect you from having to complete the purchase until your existing home goes under contract and successfully closes.

Best wishes - Ted - Wed Jan 14 2009, 23:05