Foreclosure is a process that deals with a homeowner, failed to pay the mortgage amount. The mortgage holder, in this case holds the right to gain the ownership of the property and also sell it to other in order to settle the default mortgage amount. It’s a legal process that has been there for centuries.
Short sale, on the other hand is the process when the home owner sells the property for a lesser amount than what he or she owed on their mortgage. This however, depends on the consent of the mortgage holder’s decision. The final amount is also decided by the mortgage holder. The reason for the lender to agree on short sale is to recoup a certain amount of the mortgage in one time.
1. The process normally begins when the home owner misses the payment of the mortgage.
2. After consecutive missed payments of more than three to six months (the duration varies according to state law), the lender issues a public notice with the CRO (County Recorder’s Office) mentioning that the borrower has defaulted.
3. After receiving the notice from the borrower, the lender, then by default enters into the grace period that is also known as pre-foreclosure. The duration might range from 30 days to 120 days. In this period, the borrower may offer a short sale with the consent from the lender.
4. If things don’t work out this way then the lender announces to sell the property to foreclosure auction.
5. If no one purchases the property at the foreclosure auction, then the lender enjoys the ownership of the property.
1. The seller, in this case, makes an agreement with a reliable real estate agent to short sale the property with the approval from the lender.
2. The real estate agent then finds the buyer who is willing to make an offer according to the present market value of the property.
3. The market value, if agreed by the seller, then he or she approaches to the lender.
4. If the lender agrees with the purchase offer, then the buyer can buy the property.
5. The short sale closes when the buyer pays the amount, lender releases the lien and the seller provides the deed.
Well, the very first step, I consider preventing a foreclosure is to get in touch with an experienced and local real estate agent who can guide you regarding all the legal aspects of the process. It is the agent who can guide you regarding your mortgage rights, what you can do, what you should not do, how to approach the lender and what to do next.
No one wants to lose assets like property intentionally. There might be some temporary obligations which may cause default of mortgage payments. But, opting for foreclosure means a permanent loss of a temporary problem.
There are ways through which, foreclosure process can be dealt with which not many borrowers are aware of. They are often not aware of their mortgage rights. In such a situation, if anyone is genuinely looking to prevent foreclosure, consulting with an experienced agent can provide the solution.
If you are facing foreclosure, you should talk to people who are known for offering successful solution to this problem. And this is something we have been doing for decades. Our Realtors have over a decade of experience helping clients who are facing foreclosure.
The very first thing that filing bankruptcy can do is to put the foreclosure process in halt. In some cases, this can lead the mortgage borrowers to save their property permanently. However, what the borrowers need to confirm is the type of bankruptcy to file for. There are two types basically Chapter 7 and Chapter 13.
One more thing to mention here is that filing bankruptcy will only help the borrower if money is not the only issue.
If you are not willing to go for the foreclosure process, there is another option you can opt for and that is mortgage loan modification. The intention here is to make the repayments more affordable to avoid foreclosure.
How can anyone qualify for that? Well, this depends on a number of factors. It is advised to contact an experienced realtor for assistance.
After the successful completion of the foreclosure process, an agreement should be made between the borrower and the lender. It says that the borrower is willingly transferring the ownership of the property to the lender.
This is important for the borrower to avoid all kinds of liability of payments related to the mortgage of the property.
The borrower may not even know the answer to this question, but you can always obtain the answer yourself through a review of the public records. Know that the clock is ticking and a borrower can select loan modification or short sale, but cannot work on both simultaneously.
If borrowers are even remotely entertaining loan modification, it is important for them to know that a high debt-to-income ratio will likely rule them out for loan modification.
If the borrower’s hardship is temporary, then he (or she) may qualify for a loan modification. And, if the borrower wants to attempt a loan modification, this should be done prior to taking the short sale listing. (After all, who wants to work hard for a few months on a short sale only to learn that the seller does not want to move forward with the closing?)
There are many distressed borrowers that absolutely want to move on and leave their property behind. It’s a good thing to know the answer to this question before moving forward.
It is always important to assure that the borrower understands all of the available options—loan modification, short sale, foreclosure, deed-in-lieu of foreclosure, and even bankruptcy. An educated borrower and short sale seller is going to be more deeply vested in the success of the short sale transaction.