If you are in the market for a new house, then you may have seen some pretty attractive prices out there for homes. You get excited at first and think you found a diamond in the rough. Then you see the term “Short Sale” on the description. A short sale property isn’t something you should shy away from, but it does come with a different set of rules than a conventional home purchase and you should be aware of them before you get too excited.
A short sale simply means that the sale price of the real estate is less that what is owed by the current owners. The lien holder agrees to release the lien hold on the property for an amount that is less than the current lien. When purchasing a short sale, the process is often times longer and more drawn out, but the reward is a good price on a home. If you see a short sale and fall in love with the property, you can make an offer to the current owners. Most times, because it’s a short sale, the homeowners will accept the offer. After the offer has been accepted, the homeowners take the offer to the bank. The bank needs to approve your offer before you can move forward. They will either approve it or reject it, but it can take them a few weeks to a few months to give you an answer. So if they end up rejecting it after waiting 3 months, then it can become very frustrating for the buyer because they may have lost out on a few other nice opportunities while they were waiting. The good news is that once the bank approves the offer, then most of the time, the transaction can proceed as a normal real estate transaction. If you are in a rush to purchase real estate, then a short sale may not be the right option for you. Patience is a virtue when it comes to purchasing a short sale.
As with any real estate transaction, it’s very important to have a real estate lawyer involved in the process. Short sales are no exception.
During the spring and summer months tend to be the busiest season for buying a home. The weather is warming up, homes landscaping begins to look new again and those who have children tend to move when they are out of school. For those who have been looking to buy a new property for some time now may want to know what to expect come a short sale.
You found a home you love, but it’s not your standard settlement process, that is why Charles Block real estate lawyers are here to guide buyers through unknown waters. When the mortgage of a home is in default and the current homeowners can’t pay, they use a short sale to avoid a foreclosure. If you happen to be looking to purchase a short sale you most likely want to pay less than what is due on the mortgage. In a real estate transaction such as a short sale, having an experience attorney by your side it important to push this process along a little faster.
By having an attorney represent you, it will make sure the buyers are not being taken advantage of and that they are paying a reasonable price come settlement. This process may take quite awhile due to the fact that the bank has to agree on the mortgage, which is most likely less than what is owed on the house.
Short sales have become more frequent in the economy today, so homeowner’s avoid foreclosure because it affects their credit. Charles Block real estate attorneys know the ins and outs of the market and will be able to help potential buyers when looking into a short sale to make sure they are getting a good deal, although there is the added paperwork. So when considering buying a short sale, be sure to have an experienced lawyer by your side this spring season.
The best way to avoid foreclosure is to prevent the filing of a Notice of Default. Lenders do not want to foreclose but will file a Notice of Default to protect their interests, if necessary. If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender.
Do not ignore letters from your lender because those responses will make the situation worse, not better. Depending on your particular situation and hardship circumstances, here are some options your lender might propose to you:
Time To Catch Up Your Payments:
Lenders might agree on forbearance. The lender will wait before taking legal action against you and let you work out a repayment plan that is affordable for you.
Forgiving A Payment:
Debt forgiveness is rare. It involves agreeing that you will be current after missing a payment and the lender waiving your obligation.
Spread Out The Missed Payments Over A Longer Term:
A repayment plan allows you to pay your missed payment over a few months to a year. For example, if your payment is $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up.
Changing The Terms Of Your Loan:
If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or change the interest rate to a more manageable.
Add The Back Payments To Your Loan Balance:
If you have sufficient equity and meet the lender’s lending guidelines you might be able to refinance. Here the lender might increase your loan balance to include the back payments and re-amortize the loan.
Make A Separate Loan To You:
During a partial claim borrowers who meet specific criteria can apply for another loan, which will pay back the missed payments.
Foreclosure can happen to anybody in any financial income bracket. Also, it is not something that you should hide from because it never goes away.
There are many ways to avoid foreclosure but you must act on time. Once you miss your first payment it gets hard to catch up and becomes overwhelming
Foreclosure is when a Lending institution repossesses your home because of unpaid mortgage payments. The mortgage company does not typically begin the official foreclosure proceedings until you are 3-4 months past due. The duration of proceedings depends on your State’s Foreclosure laws.
The Obama Administration has put a number of programs in place to help homeowners who are at risk of foreclosure and struggling to make their monthly mortgage payments. Homeowners are encouraged to contact their lenders and loan servicers directly to inquire about foreclosure prevention options available to them.
Programs to Help Homeowners Avoid Foreclosure Include:
.The Making Home Affordable © (MHA) Program: helps homeowners avoid foreclosure, helps stabilize the country’s housing market, and also helps improve the nation’s economy. Homeowners have the opportunity to lower their monthly mortgage payments and obtain a loan at a lower rate. There are also choices available for unemployed homeowners and homeowners who owe more than their homes are worth.
.Home Affordable Modification Program (HAMP): lowers a homeowner’s monthly mortgage payment to 31 percent of their verified monthly gross (pre-tax) income. The HAMP modification usually results in a 40 percent drop in their monthly mortgage payment.
.Principal Reduction Alternative (PRA): was designed to help homeowners whose homes are worth less than they owe, by encouraging servicers and investors to reduce the amount you owe on your home.
.Second Lien Modification Program (2MP): this program was designed for homeowners whose first mortgage was modified under HAMP SM and they have a second mortgage on the same property. The homeowner might be eligible for a modification or principal reduction on their second mortgage under 2MP.
.Home Affordable Refinance Program (HARP): is designed to help homeowners who are current on their mortgage but have been able to refinance because the value of their home has declined.
.Home Affordable Unemployment Program (UP): designed for individuals who are unemployed and are having a tough time making their mortgage payments. The program provides a temporary reduction or suspension on your mortgage payments for at least twelve months while you seek re-employment.
.FHA Forbearance for Unemployed Homeowners: Federal Housing Administration (FHA) requirements now require servicers to prolong the forbearance period for unemployed homeowners to 12 months. It also requires servicers to extend the forbearance period for FHA borrowers who qualify for the program from four months to twelve months also removing any upfront hurdles to make it easier for the unemployed borrowers to qualify.
.Home Affordable Foreclosure Alternatives (HAFA): If your mortgage payment is unaffordable and you wish to transition into more affordable housing, you may be eligible for a short sale or deed-in-lieu of foreclosure through HAFA SM.