Georgia Is A "Fast Track" Foreclosure State - Count On It

When you fall behind on your mortgage, there are only four basic resolutions to your situation:

• Cure the default - bring your mortgage current
• Negotiate a loan forbearance or modification
• Negotiate a short sale
• Surrender the deed or the lender forecloses

Lets take a quick look at each one.

If you are able to bring your mortgage current, and the circumstances that caused you to fall behind are no longer present - this is the best solution. Your credit rating will suffer a little because you fell behind… but by bringing your mortgage current and making the future payments on time, you can rebuld your credit rating.

If you can not bring your mortgage current - but the  circumstances that caused you to fall behind are no longer present - you might be able to negotiate a loan forbearance or modification. A forbearance allows you to resume making your normal monthly mortgage payments - with an additional partial payment for several months until your delinquency is eliminated.

For example, if you were three months behind, and the bank allowed you to make a payment equal to one and a half payments each month - you would make an extra half a month payment for six months.

A loan modification  would actually change the terms of your mortgage - for example, your deliquency could be added to the back of the loan, extending your mortgage to a later date.

If those options won’t work for you, it’s time to consider a short sale. A short sale occurs when a property is sold and the lender agrees to release their lien for an amount that is less than what is owed - a procedure that just happens to be our specialty. If you truly can not afford to keep your home - chances are that you’re eligible for a short sale.

A good short sale deal is the lesser of two evils to your bank, so as long as a short sale makes more financial sense than a foreclosure - there’s a good chance they will agree NOT to pursue you in the future with a deficiency judgment. On the other hand, if you should let your home go into foreclosure - you can count on them seeking a deficiency judgment.

If you are unable to sell your property by short sale prior to foreclosure, and you only have one lien holder, then you might be able to surrender the deed to the lender in what is called a Deed In Lieu Of Foreclosure. This is a voluntary foreclosure, whereby you are giving the bank immediate control of the property. By surrendering the deed - along with a broom-clean property - you’ll reduce the expenses that the bank will eventually sue you for.

Since you are much better off by avoiding the foreclosure, let me take a moment to describe how we can help. We’ll first assess your current situation and your desires. Based upon our assessment, we’ll determine the best way to help. We may refer you to a law firm that specializes in loan modifications. We may bring in an investor to place an immediate offer to stop the foreclosure - or initiate the process. There are several options that can all accomplish the same goal of helping you avoid foreclosure through a short sale.

To get started with your assessment, call our Finance Specialist Cindy McDanel at 770-572-7002 and tell her about your particular situation.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

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Some People Take This Holiday Season Way Too Seriously

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If You Can No Longer Pay - You Need To Make Plans To Go

The holidays always bring both joy and sadness to me. I know what it is like to have too much Christmas list left at the end of the money - and I bet this holiday season will be particularly hard on many fellow Georgians.

The recent housing report shows that 1 in 9 homes are in some stage of foreclosure right now, and today I met with a new client who lost his middle management job last summer. Trying to keep a good face on things, he was in the middle of pulling out the Christmas lights to dress up the house when I arrived.

He explains to me that he can no longer pay his mortgage, and that this will be the first time he has missed a payment in the twelve years he has owned his home. Being at retirement age, he has found out that finding a meaningful job is far more difficult than he had previously thought it might be. He’s quickly running out of cash and unemployment benefits and can see he will not be able to keep the house.

What this new client did that was most notable - he called me before he was 30 days late. Yep, this is the first month that he couldn’t pay. I was listing his property before he was 30 days late. That’s very important, as he is giving me the best chance to find a buyer and negotiate with his lender.

I set the list price of the home at a price that is much lower than a recent appraisal for refinance, as  re-fi appraisals are useless as true indicators of value. I looked at which homes had recently sold, what similar homes are pending sale, as well as what other comparable homes are now available that this listing will be competing with. We have time to test out the high end of the market before we get aggressive with price reductions.

My client will get through the holiday season with bittersweet memories of the home he has loved for the last twelve years. He can expect to remain in the house for the next few months, keeping the lights and the heat on while we look for a buyer. We’ll get a buyer in the next 60 days or so, and then close in the following 60 days - or less. Well that’s the plan anyway.

If you’re struggling with your mortgage - you need to make arrangements to protect your credit and minimize your liabilities - and the short sale can do both. Many short sale payment arrangements result in NO deficiency judgments and NO tax penalty. A short sale is always better than a foreclosure.

To start the process of evaluating your options, call our staff loss mitigation specialist Cindy McDanel at 770-572-7002.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.

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Homeowners Must Qualify To Sell Their Home By Short Sale

You are in a similar predicament to many people in America right now. The tidal wave of foreclosures was caused - in part - by sub-prime lending that used "teaser" rates in the first few years that then escalate to higher payments as the loan matures.

You might be a candidate for a short sale - but only if you can demonstrate that you can no longer afford the home. If the lender believes that you have exhausted your ability to comply with the terms of your mortgage - then the chances of getting you out of that property by short sale are good.

However, if you obtained your mortgage by fraudulent means - such as lying about your income - then the chances of saving you by short sale are slim.

Short sales are reserved for those homeowners who are unable to keep their commitment - but obtained their mortgages in good faith. If you perpetrated a fraud on the lender, you can forget about getting their help in preserving your credit.

Part of  the process for obtaining a short sale approval from your lienholders is providing bank statements and tax returns to help prove your hardship. If you are seeking a short sale simply because your mortgage is greater than the value of your home - save your breath. It ain’t gonna happen.

The first step of our process begins with evaluating the homeowner’s options and desires. For homeowners who want to stay in the property, we examine the options that could achieve that goal - and with new federal programs rolling out, that option will become more available in the next few months.

If our analysis shows that keeping the home will not be an option, we assist with the alternative option of selling the home before the lender forecloses. The short sale process is a lengthy one - so every day is precious and valuable.

The worst thing a delinquent homeowner can do is wait too long to seek help. The goal is to find a buyer BEFORE the lender forecloses. If the homeowner waits too long - there will be little that can be done. We can often postpone the foreclosure if given enough time - but calling us after your home is being advertised for sale on the courthouse steps is a little late.

To start the process of evaluating your options, call our staff loss mitigation specialist Cindy McDanel at 770-572-7002.

As always, if you have any questions regarding real estate in the greater Atlanta area, feel free to contact me here.
 

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Helping Select Atlanta Homeowners Avoid A Foreclosure

One of the most difficult decisions a homeowner can make is to take action to leave a home they can no longer afford to keep. It is so difficult that most homeowners will freeze like a deer in the headlights - and then get mowed over by the sale of their property on the courthouse steps. Others will list their property for sale - but at such a high price that it will not attract any offers - once again resulting in foreclosure.

In today’s market, it is not uncommon to find many homeowners who do not have sufficient equity to sell their homes at market value - and still be able to pay all the expenses of that sale, which could include repairs, closing costs, and brokerage fees.

There is an alternative for many homeowners who find themselves unable to pay their mortgage - but it requires a proactive approach. It is called the short sale. A short sale occurs when a property is sold and the lender releases their lien for an amount less than what is owed. For this to occur, any secondary lienholders must also agree to release their liens, in most cases for substantially less than what is owed.

For a variety of reasons, not all attempts at a short sale can work. Homeowners who have ample assets will NOT be able to get a short payoff approved.  Second mortgages and other liens on the homeowner’s property - particularly IRS liens - can make the process very difficult to navigate, though not impossible.

One of the primary reasons for selling your home under the terms of a short sale is that you avoid a foreclosure. There’s nothing like the big, black mark of a foreclosure on your credit file… and many candidates for a short sale have otherwise fairly decent credit histories. While you will have some credit damage from late payments, a properly performed short sale will show your debt as paid in full - which preserves a great deal of your credit history that a foreclosure would otherwise destroy.

Another reason is that if you lose your home to foreclosure - and the lender sells the home for less money than you owed - the lender can seek a deficiency judgment against you.

In the past, when your lender accepted a short payoff, you would receive debt forgiveness… often accompanied by IRS form 1099-C showing the forgiveness as taxable income.  Under the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers may exclude debt forgiven on their principal residence if the balance of their loan was less than $2 million. The limit is $1 million for a married person filing a separate return.

So you see - a short sale can be the best path to take when you can no longer afford to keep your home.

Time Is Precious  When Selling Your Home By Short Sale

The biggest mistake you can make is wasting time with an ordinary agent with an unrealistic list price. That is a recipe for disaster! Most agents don’t have  the foggiest idea about how to properly price a property to sell at a price that the lender can be convinced to accept.

Let me rephrase that. Your agent needs to be able to perform a comprehensive Broker Pricing Opinion - as well as take a variety of other factors into consideration - when putting the right price on your property. This price needs to be low enough to attract a buyer - without being unreasonably low, as your lender has to be convinced that your home could not sell for a higher price.

When an initial price has been established, systematic price reductions must be made - usually weekly - until an offer is presented. Keep in mind that as a homeowner who is seeking to sell by short sale - you are on a runaway train heading for the proverbial washed out bridge. You have a very limited amount of time to present an offer to your lender, so first and foremost - you need an offer. Without an offer,  you have nothing - as it is difficult to convince the lender to refrain from proceeding with the foreclosure without one.

Once an offer has been made and accepted, your agent will prepare the short sale package (or will contract a company to prepare the package for them) and then begin negotiations with your lender and any other lienholders.

This is a strange twist for many agents, because at this point - your agent becomes an advocate for the buyer. Your agent is working to get the buyer the property at the price s/he has agreed to pay… because a short sale at ANY price is in your best interest. Your agent has to convince your lender  (and any other lienholders) that the short sale is in their best interest, too.

Since you can not receive any money from any party when doing a short sale, the sale is the ultimate goal - not the price.

Be Wary Of The Tsunami Of Offers To Help In Your Mailbox

When your lender serves you with a Notice Of Default, your mailbox will be stuffed full with offers to "help". Most of these "offers" are nothing more than buzzards trying to profit from your misery. Many will offer to give you some "walking away money" in return for you signing your home over to them. Others will offer - for a fee - to bring your mortgage current and lease your home back to you.

It wouldn’t be so bad if the offers were only given by mail - but these people are relentless… and many of them will come to your home - often several times - in their quest to "help".

I won’t say that ALL of thes