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As more homeowners exit forbearance, some will fall behind on their mortgages and many local markets will see a rise in distressed sale properties. There are a number of programs to assist homeowners who are at risk of foreclosure and otherwise struggling with their monthly mortgage payments. Please continue reading for a summary of resources available.
What is a foreclosure? Foreclosure is what happens when a homeowner fails to pay their mortgage. Foreclosure is a legal process by which the owner forfeits all rights to the property. If the owner can’t pay off the outstanding debt, or sell the property via short sale, the property then goes to a foreclosure auction. If the property doesn’t sell there, the lending institution takes possession of it.
What is a Short Sale?
A short sale is a transaction in which the lender, or lenders, agree to accept less than the mortgage amount owed by the current homeowner. In some cases, the difference is forgiven by the lender, and in others the homeowner must make arrangements with the lender to settle the remainder of the debt. Since a short sale generally costs the lenders less than a foreclosure, it can be a viable way for a lender to minimize its losses. A short sale can also be the best option for a homeowners who are “upside down” on mortgages because a short sale may not hurt their credit history as much as a foreclosure. As a result, homeowners may qualify for another mortgage sooner once they get back on their feet financially.
How Does a Short Sale Work?
There are two paths you can take to a short sale – get prior approval from a loan servicer after you provide documentation detailing your financial distress, or list the home and get an offer, then ask if a short sale could be an option. When listing your home, be sure to list your home with a certified Short Sale Foreclosure Realtor.
What is the SFR Short Sale Foreclosure Resource Realtor Designation?
Because so many real estate agents have limited or no experience with the short sale process, the National Association of REALTORS® created a Short Sales and Foreclosure Resource certification (SFR®). Realtors with this certification have the knowledge and expertise on how to guide their seller clients on how to communicate with the lender, ,how to qualify sellers for short sales; as well as how to negotiate with lenders.
For Our Clients: Short Sale and Foreclosure Resources
If a homeowner has fallen behind on their mortgage, it is important to communicate with your lender and to seek professional advice of a licensed Realtor in your area. There are options available. Use the resources below to get more information on foreclosures and the process:
- Kentucky Homeownership Protection Center
- Unemployment Bridge Program
- The Basics: Short Sales & Foreclosures, NAR
- HUD: Avoiding Foreclosure
- Home Affordable Foreclosure Alternatives (HAFA)
- The Short Sale Workflow, NAR
- Save Your Home: Tips to Avoid Foreclosure
- Making Home Affordable
- Communication with Your Lender
Bottom Line: Communicate with your lender
If you are experiencing difficulties making your mortgage payments, contact your lender or loan servicer directly to inquire about foreclosure prevention options that are available. If you are experiencing difficulty communicating with your mortgage lender or servicer about your need for mortgage relief, Find a Short Sale Foreclosure Certified Realtor (SFR) Tony Clark Realtors offers several certified SFR.
Beware of Foreclosure Rescue Scams
Foreclosure rescue and mortgage modification scams are a growing problem that could cost you thousands of dollars – or even your home. Scammers will make promises that they can’t keep, such as guaranteeing to “save” your home or lower your mortgage payments, usually for a fee, sometimes even claiming that they have direct contact with your mortgage company.
- Only your mortgage company has the discretion to grant a loan modification. Therefore, no third party can guarantee or pre-approve your mortgage modification application.
- Beware of individuals and companies using mail and/or phone solicitations that claim to be from your mortgage company, but insist that payments be sent to an alternate contact or address that is different from the information in your mortgage statement.
- Paying a third party to assist with your application may not improve your likelihood of receiving a mortgage modification.
- Beware of individuals or companies that advise you to stop making your mortgage payments or discontinue contact with your mortgage company.
- Beware of anyone or any company offering you a HAMP modification after December 31, 2017. The HAMP Program is now closed. Scammers have been calling, e-mailing and contacting individuals claiming they have been approved for a HAMP modification and requesting payments be sent directly to them.
- Beware of anyone seeking to charge you in advance for mortgage modification services. In most cases, charging fees in advance of a mortgage modification is illegal.
- You can apply for mortgage assistance on your own or with free help from a HUD-approved housing counseling agency. For more information and help with your application, call a housing counselor at 888-995-HOPETM (4673). To find a HUD-approved housing counseling agency near you, access HUD’s database for Foreclosure Avoidance Counseling.