Foreclosure Alternative
Facing foreclosure and tempted to stay in your home until the bank pulls it out from under you? Bad idea. Don’t do it. A much more graceful exit is a short sale, an agreement between you and your lender to sell your home for less than you owe. Although there’s no guarantee that your lender will let you avoid foreclosure with a short sale, new government regulations are aimed at encouraging lenders to do so.
Short sales get government incentives
Although short sales are not hassle-free, at least you’ve got the government backing you. The Home Affordable Foreclosure Alternatives https://www.hmpadmin.com/portal/programs/foreclosure_alternatives.htm (HAFA) program provides financial incentives for lenders and borrowers to avoid foreclosure through short sales. You may be eligible for up to $3,000.
Participation in the HAFA program requires adherence to guidelines–including a standard process and minimum timeframes–that speed the process. The HAFA program is for homeowners who can’t keep their homes with the help of a loan modification http://www.houselogic.com/articles/making-home-affordable-modification-option.
Advantages of a short sale
You can be a homeowner again more quickly with a short sale in your past than with a foreclosure. New Fannie Mae guidelines help you qualify for a new mortgage in as little as two years after a short sale, as opposed to three years or more after a foreclosure.
You will have more time to make relocation plans and save money than with a deed in lieu. A short sale may take four to 12 months. A deed in lieu of foreclosure arrangement typically requires you vacate your home within 30 to 60 days of signing, according to real estate attorney Lance Churchill.
You can receive up to $3,000 from your lender for moving expenses at the time of closing of a HAFA short sale or a HAFA deed in lieu of foreclosure. Relocation funds are part of the incentives of HAFA, but not necessarily for other short sale or deed in lieu programs of the lenders.
You can help your community’s home values. Because the lender often receives a higher amount of the remaining loan balance than it would from the sale of a home after a foreclosure, short sales help support home values in the surrounding community.
How to proceed with a short sale
Find a qualified REALTOR® experienced in short sales (like me). Short sales are tough to navigate, and they’re further complicated by your loan type–FHA vs. Veterans Administration vs. conventional loans. Real estate agents who specialize in short sales will know the proper steps and order of the steps involved. They’ll also be able to navigate the many parties involved in the process and over-burdened loss mitigation departments. Look especially for agents who have Short Sales and Foreclosure Resource (SFR) Certification, which requires specialized training (I have received this training).
Gather evidence to support your need for a short sale as opposed to a foreclosure. You’ll need to prove that you have little or no equity in your home, you’re behind on your payments, and you’re no longer able to afford your home. You’ll need to write a hardship letter to the lender describing your circumstances, such as a divorce, job loss, illness, death, or other event that has impacted your income.
A short sale can be a time-consuming process, but if you can avoid foreclosure, it’s worth it in the long run. I am a certified short sale specialist, having earned the Short Sales and Foreclosure Resource (SFR) certification, and can assist you in this process. Please call me at 760.219.3964 or e-mail me at pam247re@hotmail.com.