Distressed Property Info
"My mission is to save as many families as possible from foreclosure."
Certified Distressed Property Expert, Robin Cook is committed to help you make the best financial decision for you and your family. She recognizes that this may be the most difficult and stressful time in your life and is here to help. The developers of the CDPE designation believe that for the majority of homeowners that wish to sell a property, the best solution is to seek the guidance of an educated Realtor®. She will be your advocate in finding the best solution to the financial crisis you are facing.
A distressed property can be defined as:
1. A property that is in poor physical condition
2. A property that is or will soon be in some stage of the foreclosure process
3. A property whose owners are experiencing a period of financial instability
4. A property on which the mortgages total an amount higher than the current value, and an owner must sell
It is estimated that the majority of American families have only living expenses for 60 days or less in savings should their income be interrupted for any reason. Some of the events contributing to this include, loss of job, payment increase or mortgage adjustment, relocation, severe illness, divorce or the death of a family member to name a few.
Many families believe their only option is foreclosure. There are very good reasons to try and avoid foreclosure:
1. The client will always have to disclose that they have had a foreclosure on any mortgage application and any job applications they submit in the future, and this can have an adverse effect on your future mortgage rates. This is the only credit item that is asked specifically and does not rely on what is on an individual's credit report
2. Credit scores will be lowered 300+ points and a foreclosure is the most devastating credit issue you can have in relation to future credit availability.
3. A foreclosure is the one credit report item that is almost impossible to have "repaired".
4. Your lender may be able to seek a deficiency judgment against you and collect for any amount they do not recuperate at bank sale.
5. Many employers run credit checks on prospective employees and foreclosure is one of the top items that will put a potential hire in jeopardy.
6. Many current employers run credit checks and a foreclosure can put a current position in jeopardy.
7. Security clearances and government positions including but not limited to military and law enforcement, can be jeopardized by foreclosure.
8. The client may be responsible for any deficiencies after foreclosure for an indeterminate period of time, depending on the state you live in.
Foreclosure is a legal process that a lender must go through in order to take possession of a property for which it holds a mortgage.
There are some options to foreclosure:
1. Reinstatement occurs if the reason the homeowner missed payments was temporary, and they are able to pay all missed payments, late fees and legal fees that are due, up to the date that the loan is reinstated. Once this is done, the mortgage is reinstated and the owner is free to make payments as they had done before.
2. Forbearance or Re-Payment Plan is again used if the reason for missing payments was temporary and the owner is unable to make a one-time reinstatement payment. The lender allows the owner to pay the missed amount over a period of time or they place the missed payments on the end of the amortization of the loan.
3. Selling the property can cure the foreclosure if there is enough equity in the home to pay off mortgages and any existing liens.
4. Renting the property can provide a solution provided the mortgage is made current.
5. Refinancing the property is an option if there is sufficient equity, income, and the owner's credit has not been too badly damaged.
6. Mortgage Modification where a lender lowers the interest rate on the existing loan in order to lower the payments is an excellent option for homeowners to keep their property.
7. Deed-in Lieu of Foreclosure is sometimes referred to as the friendly foreclosure since the homeowner essentially gives the deed back to the bank. The mortgage company agrees to take the deed back in exchange for the property and they typically have no further recourse.
8. Bankruptcy may stop a foreclosure and allow the homeowner to reorganize his debt and keep his property, but most of the time only stalls the foreclosure.
9. Short Sale. When a homeowner owes more on a property than it is currently worth, there is the option of pursuing a short sale. A homeowner is "short" when a borrower owes an amount on the property that, when combined with closing costs and commission, is higher than current market value. A short sale occurs when a negotiation is entered into with the homeowner's mortgage company or companies to accept less than the full balance of the loan at closing. A homeowner closes on the property and the property is "sold short". A seller must have a valid financial hardship for why they can't pay their mortgage to qualify for this.
Please click on the PDF link for a more detailed explanation of short sales.
>> More Info about Short Sales (PDF)
There are potential legal and accounting issues with all options. It is recommended that you seek the counsel of experts to help you choose the appropriate course of action for you.
You may find the following IRS link helpful. Be sure to return to this site if you have any questions.
>> IRS Home Foreclosure and Debt Cancellation
Don't wait! Call Robin today for a confidential, no obligation consultation.