Help for Distressed Homeowners
Have you recently found yourself upside down on your mortgage? Are you worried that foreclosure is imminent? First, investigate your options. Speak with your lender as soon as you start experiencing financial difficulty. Don't let fear or embarrassment keep you from talking to the bank, as they can help you with your situation. Remember that they want to avoid foreclosure as well.
Next, collect documentation outlining your current financial situation, and give it to the bank. You should provide income tax returns from the last two years, as well as recent bank statements. In addition to the numbers, you should also prepare a hardship letter. This letter will explain what's going on in your financial life, and why you need their help.
It is also wise to speak with an attorney about your situation, as well as a Certified Distressed Property Expert.
To learn more about what a Certified Distressed Property Expert can do for you, see below.
Alternatives to Foreclosure:
Short sales, also known as pre-foreclosure sales, were once a fairly rare occurrence. Today however, short sales are on the rise as more people find themselves in over their heads with their mortgage.
When a homeowner sells their home for less than is owed on the mortgage, this is known as a short sale. The bank must approve of a short sale, and determine whether they will forgive the remaining balance or negotiate repayment with the seller.
Short sales are desirable because sellers are able to escape foreclosure, and in many cases, have a portion (or all) of their debt forgiven. For homeowners struggling to stay financially afloat, a short sale can offer great relief.
Short sales can be tricky due to the requirement of lender approval. Pre-foreclosure sales often take months to go through—if at all. The bank wants to get all their money back, so if they think they can recoup more money through foreclosure, they will deny the short sale. Unfortunately with short sales, homeowners are at the mercy of their lenders, which can make the process stressful and time consuming. That said, homeowners that are in financial trouble should try for a short sale despite the chance that it might not be approved. A short sale will still leave a mark on one's credit score, but it won't be as detrimental as a foreclosure.
To learn more about short sales and required documentation, please refer to our Northern Virginia Short Sales page or call 703-477-6022.
If you want to remain in your house, but can't keep up with the payments, speak with your bank about the possibility of modifying your home loan. One option is to extend the length of the loan, so that the monthly payments become more manageable. There's also the possibility of shifting the mortgage from an adjustable rate to a fixed rate loan, in order to decreasing the amount of interest being charged from month to month. If you're already behind on your payments, the bank may attach the amount you're behind to the principal of the loan, to help you get current on your payments.
Include with your application detailed information about your income and assets, as well as a hardship letter.
If you're behind on your payments due to a temporary hardship, such as illness, you can apply for a forbearance agreement, which stops the bank from starting the foreclosure process. Forbearance gives you a few months to catch up on your mortgage by either extending your mortgage term, temporarily halting payments, reducing payments over the short term, or by temporarily increasing your payments until the outstanding amount is paid back. A hardship letter explaining why you're behind is required, as is a detailed financial statement.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is when a homeowner hands over the deed to their home to the bank. Homeowners can apply for a deed in lieu of foreclosure if their loan has gone into default, there are no other liens against the property, and it appears that foreclosure is imminent. In exchange for handing over the deed, the bank will cancel the mortgage, and stop the foreclosure process. This does not guarantee, however, that the lender will forgive the balance of the loan. You'll need to negotiate with the bank to handle the outstanding balance.
Certified Distressed Property Expert, Carolyn Capalbo
The prospect of facing foreclosure can be overwhelming for homeowners already experiencing financial difficulties. It's imperative to have a support team that understands what you're going through, and can assist you with selling your home before the foreclosure process begins.
Short sales can be quite complicated, and not all real estate agents are familiar with them. In addition to being a licensed Northern Virginia REALTOR ®, I am also a Certified Distressed Property Expert (CDPE), which signifies that I have received specialized training in short sales and foreclosure alternatives. I have experience not only in navigating the technical aspects of a short sale, but I also understand the emotional strain that homeowners in this situation can feel.
As your agent, I'm here to support and guide you as you try to sell your home.
In addition to helping distressed sellers, I also work with a number of absentee homeowners who need to sell their home at a distance. In many cases, these homeowners were unable to keep up with their mortgages, and were forced to rent out their properties while they relocated somewhere else. If it had been possible, they would've sold their homes rather than rent them out, but they were unable to find the right buyer at the time. Now they're stuck dealing with tenants, and are attached to a home they can no longer afford.
In other cases, second homeowners have found themselves struggling to make ends meet, but are unable to sell their vacant home. The possibility of foreclosure looms, and the financial burden continues.
If you find yourself in a similar situation, give me a call. I will make sure that your home is maintained while it sits vacant, and take care of pricing, marketing, and negotiating the sale of your home. To find out how much your home is currently worth, fill out my free home evaluation form.
To discuss your unique circumstances, please contact me online or call 703-477-6022.