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Foreclosure FAQs
- I've missed a few mortgage payments, what will happen?
Your home may undergo the foreclosure process, but there are ways for you
to prevent this from happening.
- What should I do once I'm behind on my mortgage payments?
Don't wait, get help early! By actively working to resolve the issue as soon
as possible, you greatly increase your chances of avoiding the loss of your
home through foreclosure. If you even see the possibility of missing a payment,
contact your lender and explain your financial situation. This act of initial
contact, before letters of delinquency arrive, will help your lender understand
that you are facing issues that impede your payments, providing your lender an
incentive to find a proper "work out" resolution, or to begin modifications
to your loan.
- What is a "work out" resolution?
Commonly, the term "work out" resolution is an agreement where you continue
making payments on your past due amount over a period of time, or a modification
to your loan to lower your interest rate, or an extension loan period that will
help lower your payments.
- I am in the foreclosure process, should I stay in my home or leave?
You should contact your attorney to determine the best course of action. Abandoning
your property may have severe negative consequences on your qualification for assistance.
- Do you have any other advice?
Always be wary of potential scams. Any person or company offering a solution
that sounds overly optimistic may be trying to take advantage of you during
your time of financial troubles. Some warning signals of a scammer include
anyone who charges a fee before any services are completed.
- Why would my lender rather help me stay in my home than foreclose?
There are several reasons your lender may be interested in other options than
foreclosure. Most times, the lender will take substantial financial losses,
on average $50,000, from a home foreclosure. Mortgage companies are not interested
in owning and selling homes.
- How common is foreclosure?
Unfortunately, foreclosures are becoming more common and happen to many Americans.
Although the number of foreclosure filings vary from state to state, and even
from one financial quarter to the next, the number of filings nationally in 2008
was 3.1 million for 2.3 billion U.S. properties. This is an 81% increase from
2007 and represents 1 in 54 housing units in America having received at least
one foreclosure filing during 2008.
- What are the implications to my credit score?
A short sale is usually reported as paid in full and is not reported on your
credit history. A foreclosure will remain on your credit history for 10 years
or more and will remain as public record.
- Who decides if my home should undergo a foreclosure or a short sale?
In both short sales and foreclosure, the decision is made by your mortgage lender.
The most important aspects to getting a lender to agree to a short sale, and
saving you the more damaging credit implications of a foreclosure, is to prove
that you have no other way to pay the mortgage and that the amount received
from a short sale is the fair price of the market. Lenders who believe they
can receive more by taking possession of the home in a foreclosure and selling
it themselves will not agree to a short sale.
- How long will I have to wait to buy another home?
After a foreclosure, you may end up waiting another 24 to 72 months before
a mortgage lender will offer you an interest rate that is acceptable. Most
mortgage lenders report that for homeowners who have undergone a previous
short sale they may get a reasonable interest rate in less than two years.
Fannie Mae guidelines allow a short seller to apply for a new loan immediately
if payments were kept current and had no 60-day late payments on their record.
- What will be the effects on my future loans?
For most mortgage lenders you will not be asked to declare or be questioned
regarding a short sale on any standard loan application (1003). In regards to
foreclosure, you will be asked on any future standard loan application (1003)
if you have had a property foreclosed in the last seven years, therefore affecting
your rate. Fannie Mae backed mortgages will be available to you following a short
sale after two years. Fannie Mae backed mortgages will not be available to you
for at least five years if you have lost your home due to a foreclosure.
- Does it affect my employment opportunites?
A short sale does not appear on a credit report and will not challenge your
current employment status. In comparison, if you have a foreclosure on your
credit report, some employers consider it a reason for termination or reassignment
since many run credit checks on employees for certain positions. A foreclosure
can be extremely harmful to your chance of being selected for a new job if your
credit report is taken into consideration.
- How does a short sale versus a foreclosure affect the deficiency judgment?
If your short sale is handled successfully, the lender may give up the right
to pursue a deficiency judgment against you. If the lender does pursue a deficiency
judgment against you after a successful short sale, the amount will be considerably
lower because your home was sold at a price closer to market value than that of an
REO (Real Estate-Owned) sale. In all foreclosures, with the exception of those
states without deficiency, the bank has the right to file a deficiency judgment
against you. Since your foreclosed home will have to go through the REO process
if not sold at auction for a lower sales price, this results in a higher deficiency
judgment against you.
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CDPE
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Real estate professionals trained
to assist financially distressed homeowners find the best solution for their situation.
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The Snyder Group
702-610-0096
www.dalesnyder.net
Disclaimer: The information provided on this website should not be constituted
as legal advice. The content is intended to provide general information about
the short sale and foreclosure processes, and should not be acted upon without
the counsel of a qualified REALTOR®, attorney, and tax expert.
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