ARE YOU FACING FORECLOSURE?
You've tried to modify your loan with your bank and they are
not willing to play ball. You have a
large past due balance which you cannot afford to pay in order to bring your
mortgage current. So now what? The next step, if you do nothing, is the bank
will foreclose on your property and you eventually will be evicted from the
home.
WHAT IS A FORECLOSURE?
A foreclosure
is when your mortgage company takes back a property because the homeowner
failed to make the agreed mortgage payments on the home. When you finance a house, you sign a deed of
trust. A Deed of Trust is
formed when a borrower borrows money to purchase a house, in exchange a
promissory note is signed (IOU). If the
borrower defaults on the loan, the bank has the right to seize the property.
The bank will first file a Notice of Default
at the County Recorder's Office and the homeowner will also be notified. If the loan is not brought current, then a
sale date will be established. The
homeowner will receive a Notice of Sale when/where
their house will be sold at auction. The
sale of the home will also be advertised in the newspaper, websites, etc.
At the auction, the house typically is sold to the highest
bidder. However, if the opening bid
(minimum amount the bank will accept for the sale of the house) is not met,
then the house will revert to the bank and become a bank owned property
(REO).
If you know you may be faced with a foreclosure, there are
other options available to the homeowner. The homeowner can do a deed in lieu
of foreclosure. A Deed in Lieu of Foreclosure
is when the homeowner voluntarily gives the property back to the mortgage
company. The mortgage liability will be
released from the homeowner. The
mortgage company will entertain this option when a short sale is not a viable
option.
WHAT IS A SHORT SALE?
A Short
Sale is when you sell your house for less than the amount
owed. For example, if you owe $200,000
on your house but the current market value of your home is only $150,000. In this situation, you can list your house
for sale with a Realtor as a short sale.
Once you receive an offer to purchase on your house, you will need to
get third party approval from your mortgage company. The mortgage company has to approve the sale
price of your home in order to sell it for less than what the homeowner owes. The mortgage company will conduct their own
due diligence to determine the value of the house. Once they've determined a value, they will
either accept, decline or counter the offer that was submitted.
Once your home is sold as a short sale, a deficiency balance
is created. The deficiency balance
is the difference between the amount you owed and the amount the house sold
for. The
Mortgage Debt Forgiveness Act was extended to the end of 2014 which
relieved homeowners from the responsibility of the deficiency balance from a
short sale through 2014. Hopefully this
Act will be extended in 2015 to continue to help homeowners.
For more information or to discuss your individual situation,
contact Premier Homes Realty (a real estate company you can trust!)
Broker/REALTOR®
443.415.4215 cell
443.320.9099 efax
410.363.1535 x101 office
410.363.1536 fax
Email Me Now
Go to My Website
No comments:
Post a Comment