Foreclosures and Short Sales
I received a letter from my lender stating I missed my payments. What should I do?
People go into foreclosure for many reasons. In the current market many people have negative equity in their homes and don’t have the funds to bring to close in order to clear the title of the home. Some people have divorce, death, job loss, or health problems that cause hardship.
Whatever the reason for the foreclosure here in the Salem area, the most important thing to do is not ignore the lender and pretend there is not a problem. Banks are in the business of lending, not home ownership. Lenders prefer to avoid a foreclosure whenever possible, so most will be willing to work with a homebuyer. Talk with the lender about a repayment plan, or re-amortizing the loan. If you cannot work out a plan with the lender you should sell your home. If the house goes to auction, the foreclosure will appear on your credit report for 7 years.
Can I just give the house back to the bank?
Yes, if your lender will accept that. It is called Deed-in-lieu of foreclosure.
What if I can’t sell my house for what I owe on it?
Let a Tomson Burnham agent help you negotiate a short sale. A short sale is where the lender agrees to take a loss on the mortgage due, instead of putting the home up for auction. We have successfully negotiated short sales with Chase, Bank of America, Wells Fargo, local credit unions, HSBC, and Green Tree.
What you need to know about short sales in our current market is that they are hard to do due to the volume of homes requesting short sales. You also need to know that just because your home has negative equity (i.e. you are underwater) it does not mean that you will qualify for a short sale. Lenders consider short sales for hardship situations. If you have good credit, they will most likely ask you to carry a promissory note.
I really don’t want to move. Do I have other options?
Talk with your lender about a loan modification. That should be your first step. Beware of the foreclosure scams. Have an attorney review any documents before you sign them if you are not being represented by an agent.