Sharp Rise in Foreclosures as Banks Move In

MSNBC published an article today “Sharp Rise in Foreclosures as Banks Move In” http://www.msnbc.msn.com/id/44885991/ns/business-real_estate/.  As is customary in most national news articles lately, no mention of the short sale option is made.  A homeowner, who is too ashamed or feels too harrassed by the collection calls, avoids talking to their lender.  They often believe there are no options.

Here’s what homeowners need to know:

1) Short Sales – If the owner is underwater and experiencing financial hardship it is possible for a reduced purchase price to be negotiated with the lender.  The lender will often waive the entire deficiency. Second mortgages can complicate the short sale, and a cash contribution may be required from the buyer.  Homeowners should contact a real estate agent, who specializes in short sales, to discuss short sale  pre-qualification as soon as they have problems.  Short sale acceptance criteria vary by lender.

2) Time until Foreclosure – The article addresses the often lengthy time for a court ordered foreclosure.  Don’t be confused by this.  In Virginia ownership is transferred through a  Trustee Sale as foreclosure here is non-judicial, and it can be swift.  Homeowners can be shocked when they realize they have lost their home.  The process can move that quickly.

The worst thing a distressed homeowner can do is to do nothing.  There are loan modifications which may be available under HAMP (Home Affordable Modification Program), and homeowners may qualify for a preapproved HAFA short sale or pursue a tradtional short sale.

3) Foreclosure Relief – Is often miscontrued as a government program to allow homeowners to stay in their homes while foreclosure is stalled.  There is no such program in Virginia.  A loan modification under HAMP will lower your payments, but if the owner can make no payments the inevitable is just being delayed.  Lining up a cheaper rental before credit gets wrecked is a much better alternative than an eviction once your home has been sold through a Trustee Sale.  A preapproved HAFA short sale will suspend your payments for 120 days (longer if an extension is granted), but the homeowner must apply for it through their lender (not all will qualify) and list the property with a real estate sales agent.

Homeowners shouldn’t succumb to a a false sense of security.  There is no  federal or local government policy to stall foreclosure which allows homeowners to pay nothing without doing a short sale.  If they don’t pay their mortgage and aren’t pursuing a short sale – they will lose their house to foreclosure.  It’s that simple.  Homeowners don’t even need to be behind yet on payments to qualify to start the short sale process

The worst thing homeowners can do is to wait until the notice of sale is published in the newspaper.   Don’t wait until it is too late for a short sale.  If the home is a second home or investment property- it may still qualify.

Contact Tara Semtner at Snipes Properties, (804) 551-0785 or tara@snipesproperties.com to get started on the pre-qualification process today!