I have had a few calls lately from people around the Williamsburg who’s homes were in the middle of a trustee’s sale (sometimes called a "foreclosure"). For some reason many wait until its almost too late to ask for any help. In fact, one couple waited to call until day before the sale; expecting that the process to stop the sale was so simple that anyone could do it in a moments notice.
What should you do if you are behind on your mortgage payments? Once you realize that you cannot pay the regular payments you need to be immediately pro-active. Contact your mortgage company to determine if they have programs to help you. Find out from all your lenders the amount that is owed against the house. Determine the true value of your home. Talk to a realtor to determine the true value of your home; make sure to consider all necessary repairs. Have the Realtor prepare a net sheet indicating what your costs will be in selling the home and what you will net pr oew from the sale. After you have these numbers decide whether you can afford to keep this house and whether there is value (equity) over and above the debt(s) owed on the home.
Read on for other possible options.
(1) Short Sale
(2) Sell the house and use the equity to start over.
(3) Rent to house for enough to pay the mortgage(s).
If there is no equity and you cannot sell the house for what is owed against it, then you have to consider letting the lender foreclose, or talk to the lender about a "short sale" or Deed in Lieu of Foreclosure. All of this work must be done before you can make a decision as to the next step – whether or not to file bankruptcy.
Understand that if you wait until after a trustee’s sale has been started there will be additional fees and costs for the trustee who is conducting the trustee’s sale. You must pay those additional trustee’s fees and costs, plus all past due mortgage payments. In addition, your past due payments will increase if your loan has a default rate of interest and late charges. The quicker you do something, the less money you will need to pay. If none of the options above work for you, then you may need to consider bankruptcy. Bankruptcy is not a long term answer if you cannot afford to pay the regular monthly payments.
Short Sale
If you cannot bring your loan current, afford to make payments moving forward, or are unable to sell the property for the full amount of the loan, your lender may accept less than the amount owed as full payment.
PRO: Under the terms of a short sale, your lender may forgive your mortgage debt in its entirety according to the terms outlined in The Mortgage Debt Relief Act of 2007. Fannie Mae has announced a reduced mandatory waiting period to establish credit history to 2 years after the completion of a short sale. This mandatory waiting period after a short sale is lower than the required 5-7 years following a foreclosure.
CON: You must sell your home.
Deed-in-lieu of foreclosure
If you are unable to bring your loan current or sell your home in a reasonable amount of time, your lender may agree to have you voluntarily transfer the deed to the property to them to help avoid the impact of a foreclosure on your credit rating.
PRO: By voluntarily transferring the deed, you save your lender tens-of-thousands of dollars in foreclosure proceedings. If you are willing to do this, Fannie Mae has reduced the mandatory waiting period to establish credit history to a minimum of 4 years. This mandatory waiting period after a deed-in-lieu of foreclosure is lower than the required 5-7 years following a foreclosure.
CON: Although a deed-in-lieu of foreclosure may have less impact than an actual foreclosure on your ability to establish homeownership in the future, if you are going to cooperate with your lender and take a proactive approach, a short sale is generally the better option.
If you would like to meet to discuss options to sell your home in Williamsburg or Hampton Roads VA contact John@MrWilliamsburg.com or call 757 254 8136. I would be happy to provide more details on all options available.
In this new web commercial from Freddie Mac, learn to spot a foreclosure scam and find out how to avoid becoming victim to home foreclosure fraud.
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If you suspect that you have been a victim of a loan modification scam you can report it by calling 888-995-HOPE 888-995-HOPE or filing a report through the Loan Modification Scam Alert website. |
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