Serving Bellingham & Whatcom County
Coldwell Banker Bain
Tom DeRose :: Wireless: 360-220-9355 :: Email: tderose@coldwellbankerma.com
We Can Offer You Solutions to Foreclosure
What should you do if you are in a distressed situation with your home. Many homeowners who are at risk of default or who have defaulted on their mortgage believe that foreclosure is their only solution. There are, however, many options other than foreclosure. And although real estate brokers will not participate directly in all of the options (for example, a lender workout), real estate brokers have an obligation to inform distressed sellers of all available solutions.
Home Affordable Foreclosure Alternatives (HAFA) Program
Perhaps the best Federal program for distressed property owners is the HAFA (Home Affordable Foreclosure Alternatives) program. Through this program, sellers receive $3000 relocation assistance. The foreclosure sale must be suspended while eligibility is determined, the property is marketed, or closing is pending. Sellers are released of all liability on 1st and subordinate liens. The short sale is pre-approved. Purchase agreements are approved or disapproved within 10 days. If the short sale is not successful, a deed-in-lieu of foreclosure may be possible.
You have options when facing foreclosure on your home:
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Refinance |
If you meet the required eligibility criteria, one of the best options in Home Affordable Refinance, a Federal program. See xxxx for a link to the website and description of the program.
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| Lender Workout |
In a forebearance, the lender spreads the back payments, fees, penalties, etc., over a fixed number of upcoming payments to allow the homeowner to catch up.
With a loan modification, lenders will often work with the homeowner to help them keep their home by reducing or rolling back interest rates, forgiving back payments fo adding them to the loan amount.
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| Bring Cash to Closing |
If you take this option, it is imperative that you have the necessary funds to pay the balance between what you owe and what the home will sell for. This includes the fees associated with closing the sale.
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| Offer the lender a Deed in Lieu of foreclosure |
You can offer to trade the property to the lender in exchange for the cancellation of the note (mortgage). You should hire an attorney if you opt to do this.
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| Short Sale |
There may be a window of opportunity you to put your property on the market and try to sell it in order to at least partially pay the lender what is owed.
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| Foreclosure | Your home will be auctioned on the court house steps. The proceeds of the auction will go to the lender and at least partially pay the lender what is owed. |
Why short sale is preferable to foreclosure
Short sales are considered preferable to foreclosure because short sales:
- may not damage the distressed owner's credit report and/or the ability to obtain financing in the future as much as a foreclosure, and
- lesson the impact a foreclosure can have on the surrounding community.
There are varying opinions on the number of points by which a short sale or foreclosure will lower a distressed homeowner's credit score. Some consumers report that a short sale lowered their credit score by only 50 points. Others attest that a foreclosure decreased their score by 200 points or more.
Credit-scoring takes into consideration a number of factors including the following:
- Payment history
- Amount of debt compared to credit limits
- Length of credit history
- Number of credit accounts
- Types of credit accounts
Where short sale and foreclosure proceedings are concerned, what is certain is that a distressed homeowner who completes a short sale will be able to qualify for a loan owned by Fannie Mae sooner than if the homeowner allowed the property to go into foreclosure.
