A brief overview of available options

Loan Modification
A ” Loan Mod” involves the adjusting one of the following: the interest rate, the principal balance, the term of the loan, or any combination of these. This generally is done in an effort to reduce the monthly payment for the homeowner.
· Benefit: Reduces the payment a homeowner is required to make on a monthly basis and may reduce the principal balance of the loan
· Drawback: Requires that a homeowner 'qualify' for the new payment and will often require full documentation.

Rent the Home
A homeowner whose monthly housing expenses are low enough to be covered by a market rent can convert their property to a rental and use the rental income to pay the mortgage and other carrying costs.
· Benefit: Allows homeowner to keep property indefinitely.
· Drawback: The difficulties and liabilities that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance.

Deed in Lieu of Foreclosure
A deed in lieu of foreclosure allows the homeowner to return the property to the lender on a pre-determined basis, rather than go through the foreclosure process. Lender approval is required for this option.
· Benefit: Many times in a successful deed in lieu, the lender will forego their right to a deficiency judgment.
· Drawback: A deed in lieu may be reported to credit bureaus just like a foreclosure and can be very damaging to a credit score and the lender may pursue the deficiency after the foreclosure sale.

Bankruptcy
Generally, bankruptcy will only “delay” a foreclosure, however, if the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.
· Benefit: Does not require lender approval.
· Drawback: If a homeowner cannot afford their mortgage payment, a bankruptcy will only stall—not stop—the foreclosure process. Bankruptcy can be costly, is very damaging to credit scores, and can only be declared once every seven years.

Short Sale
If a homeowner owes more on their property than it is currently worth, then they can sell their property through the negotiation of a short sale with their lender. This typically requires the property to be marketed by a professional real estate agent in the MLS and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.
· Benefit: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual's public record, and in many cases will allow the homeowner to avoid a deficiency judgment. Borrower may qualify for another mortgage in as little as 24 months (as opposed to five years for a foreclosure). Generally, the seller will not have to pay any closing cost, commissions, etc. that are normally a part of a home sale-the lender pays these.
· Drawback: Short sales can be a very involved process and can take quite a long time depending upon a number of factors.

The above is only a brief overview of some of the solutions available to homeowners today. Please call or email me today for a confidential evaluation of your individual situation and the options available to you. mailto:Info@ShortSaleExperts.pro