Do You Know Someone Having Trouble Paying the Mortgage?

Most people do know someone.  Every three months, 250,000 new families enter into foreclosure[i].  Most folks, who are in danger of foreclosure, are not advertising their situation to friends and neighbors because the public notoriety of a foreclosure can be devastating.  Many of them do not have to lose their home, but no one has told them about the options. 

Foreclosure is the legal process used by a lender to force the sale of real property that has been pledged as security for a mortgage.  Below are a few of the options to foreclosure available to a homeowner:

·         Deed in lieu of foreclosure

·         Bankruptcy

·         Short Sale

·         Refinance

·         Loan Modification

Since I am an Associate Real Estate Broker, and not an attorney, tax advisor or credit counselor, I advise my clients to seek advice from a HUD authorized credit counselor, an attorney and tax expert, before deciding on a course of action.  The credit counselor will be familiar with any help that might be available through federal, state or county agencies.  HUD counselors can be reached at 800-569-4287 or by visiting HUD’s website[ii]. 

Sometimes I am contacted by a homeowner, who has been advised to proceed with a short sale[iii].  In that case, I do my best to sell their home, in a reasonable period of time, for the highest price that the market will bear.  A properly handled short sale can sometimes result in a more favorable credit score than a foreclosure. 

I have to stress however, that often, if not most of the time, the homeowners can find a solution that does not end with the loss of their home.  Most mortgage servicers today would prefer to find a way to help.  Foreclosure results in a financial loss for the homeowner and the lender.  If it can be avoided, everybody wins.  If you know someone in danger of foreclosure, do them a favor.  Advise them to contact HUD.  It will be the best advice they will receive in some time.

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[i] Mortgage Bankers Association - http://www.fdic.gov/about/comein/files/foreclosure_statistics.pdf

[ii] HUD - http://portal.hud.gov/hudportal/HUD?src=/i_want_to/talk_to_a_housing_counselor

[iii] A Short Sale is a transaction in which the Seller’s proceeds are less than the amount necessary to pay off liens secured by the property.  Examples of such liens include, but are not limited to, mortgages, home equity lines of credit, tax claims, homeowners’ association fees and legal judgments.