Below are questions and answers from
the many inquiries I receive regarding short sales.
Although many of the questions are similar I realize
everyone's situation is unique. Most government
and lending programs are not flexible. They have
certain criteria that must be met in order to keep your
home. It's important to know if you qualify before
you spend more money trying to keep your home. Get
as many answers to your unique situation so you can to
make an informed decision about your personal financial
situation.
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A
nation-wide initiative to help homeowners take advantage
of the mortgage forgiveness and debt relief described in
H.R.3648, The Mortgage Forgiveness Debt Relief Act of
2007, which has been extended through 2012 allows
homeowners to sell their upside down home and relieves
them of the tax consequences under certain circumstances. Note: this is only
part of the puzzle. |
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What does that
mean for homeowners that expect to get government help?
First you need to know
whether you qualify to keep your home. Seems like
a strange thought since you already have a mortgage and
live in the home but the lenders have a different angle.
Banks make their money by borrowing low and reselling
the loans. In order for buyers to buy the
mortgages from the lender they require certain
underwriting. If you don't qualify to keep you
home the lender will proceed to foreclosure.
New programs offer homeowners the ability
to reduce their mortgages and monthly payments to an
affordable amount as long as the homeowner qualifies for
the payment. If you are employed and make enough
to pay your mortgage contact your lender right away and
see what programs are available for you. |
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| I heard the
lenders have to reduce my mortgage so my home is
affordable and I can keep it. Why isn't that
happening? Not all lenders
have the same requirements so when you hear about a
program it may or may not apply to your lender. If
you have a second mortgage this also effects how the
lenders will proceed. |
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| I own an
investment property was told it is possible now to
renegotiate the loan with the lender. How do I go
about this process? I am
hearing more and more about lenders making deals on
investment properties but they are few and far between
due to the complications involved in the loan itself and
how it effects the lenders borrowing power. I
suggest borrowers contact their lenders and at least try
to renegotiate their loans. If you list your
property for sale make sure there is an escape clause in
the event your are able to retain your property. |
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| Why aren't the
lenders taking responsibility for approving the loans in
the first place? Good
Question. It seems the lenders are taking a hard
stand. If property is not homesteaded, has second
mortgages or is in any way not good for their (the
lender) books and they are taking losses they expect the
borrower to pay any way they can. If a borrower is
unable to pay or has run out of money trying the lender
then proceeds to foreclosure or under the new
regulations maybe the alternative of a short sale or
deed in lieu of foreclosure. |
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| Recently I was
able to negotiate a lower payment with my lender and
brought my payments current. My property is still
upside down and no real chance it will make up the
difference anytime soon. How do I get the lender
to reduce the principal balance?
It seems one of the first steps for
lenders helping owners keep their homes is the payment
adjustment. The lender reduces the payment usually
for a 3 to 6 month time frame, puts the past due balance
on the back of the loan including interest, past
payments, taxes, insurance and/or any other costs that
accumulated that the borrower can not come up with to
bring the account current. Borrowers are finding
their loan balance increasing and the property value
decreasing. The end result is not a win win for
either the borrower or the lender. The lender
wants to keep the loan to value ratios in line along
with a borrower that can maintain the payments. In
the end. if the principal is not reduced along with the
payments the borrower is likely to end up in default
again. |
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| I contacted a
mortgage broker and was told after going over my
finances that I qualify for a loan modification.
The mortgage broker wanted $500 to start the process
which seemed reasonable for me to keep my home. I
was told I would have to pay an additional $1,500 after
the process was complete. It has been some time
since I heard anything about the modification results.
When I call the mortgage broker they tell me it's being
worked on and is under review. I am getting
impatient worrying. What can I do to expedite the
process.
I suggest you call your lender.
Follow up and see where they are in the process or meet
with your mortgage broker and ask to do a conference
call with the lender. Most lenders would rather
you keep your home than foreclose. |
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