My Beautiful Sacramento

Many homeowners are finding themselves in financial distress these days as a result of bad loans and unemployment.  They are asking, "How do I refinance when I owe more than my property is worth?" or "How can I get a loan modification?"  With property values in decline many homeowners owe much more on their homes than the property is worth which makes refinancing impossible.  Selling the home seems out of the question because the sales price would not pay off the loans that they owe on the home.  Foreclosure may seem the only action which will cause catastrophic effects on the home-owner's credit.  

Homeowners are in a query of what to do to save their homes from foreclosure and are reaching out grasping straws to find ANY solution that will save them from this awful situation.  Sadly, many become victims of rescue foreclosure scams in a desperate effort to save their homes.  

There are some alternatives.  Don't ignore phone calls or letters from your lender.  Contact your lender to see if you can get a loan modification.  If you find you are getting nowhere with your lender, contact a HUD approved counseling agency.  You can find on at www.hud.gov. You should not have to pay for a legitimate housing counselor. 

Beware of loan modification companies popping up everywhere.  Contact an attorney if you can afford one or contact a local law school.  In Sacramento there is the McGeorge Law School.

Another alternative to foreclosure is a short sale.  In a short sale, the owner/debtor sells the property for less than the outstanding balance owed on the loan.  A short sale will remain on a person's credit report for seven years but has less of an impact and is less costly as a foreclosure.  Usually the a person can still purchase another home within 1 to 3 years after a short sale. The lender must approve the short sale based on their own criteria and the debtor must prove a financial hardship.  Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have a pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price OpinionBPO or BOV). (abbreviated

Don't let the name fool you.  A short sale is not a "quick sale."  It does sound like it should be quick but it's far from it.  I wonder whose bright idea it was to call it a short sale.  =)  I was pre-qualifying a buyer the other day and she mentioned that she would like to buy a "Quick short sale" property.  It made me realize that not everyone understands or knows about terms that are used in the real estate and loan industry.  I read the mortgage and real estate news daily because it is my job but the majority of the public only reads this stuff when it has to do with them personally.  It is my job to educate and protect the best interest of those who come to me for help. Though I do get a little chuckle out of how the terms are comprehended at times.  Shows how important it is to explain.

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