A growing number of homeowners who sought help from the Obama administration's main mortgage aid program are in danger of losing their homes to foreclosure. About 436,000 borrowers have dropped out of the $75 billion plan as of last month, the Treasury Department said today.
That's about 35 percent of the 1.24 million who enrolled since March 2009 and exceeds the number of homeowners who are getting help through the program. And nearly 155,000 of those who fell out of the program did so in the past month.
The result could be a new wave of foreclosures on homes that have not been included in the count of potential bank-owned properties. that could weaken the housing market and hold back the broader economic recovery. Most of those homeowners were rejected during a trial period lasting at least three months. More than 6,300 dropped out after having their loans modified. Experts say more borrowers are likely to drop out in the coming months. "The majority of these modifications aren't going to be successful," said Wayne Yamano, vice president of John Burns Real Estate Consulting, a research firm in Irvine, Calif. "Even after the permanent modification, you're still looking at a very high debt burden."
What we have seen is that homeowners who owe more on their loans than their properties are worth are likely to conclude that paying even a reduced mortgage payment simply isn't worth it on an upside-down home. In this scenario, a short sale is quite often the best option for the homeowner.
The new govt. HAFA program was set up to standardize some short sale paperwork and processes as well as give the seller a $3000 "relocation" incentive, forgive the "short payoff deficiency" and speed up the process for qualifying sellers.
Showing posts with label Short Sales. Show all posts
Showing posts with label Short Sales. Show all posts
3/6/10
Options for homeowners...brief descriptions
Forbearance: under a forbearance agreement, your lender may permit you to reduce or suspend your mortgage payments for a short period of time. Then, typically, at the end of the forbearace period, you will beging making your regular payments PLUS an additional amount as negotiated between you and your lender until you are 'caught up'. A forbearance agreement will only work for you if you expect your current financial difficulties to last a short time.
Loan Modification: If you are behind on your mortgage payment and can not afford to bring them current and a forbearance agreement will not work with your situation a loan modification is an option. In a loan mod, your lender permanently alters the terms and conditions of your loan in an effort to make your payment more affordable. You have, no doubt, heard or read about the failure of the govt promoted loan mod program, HAMP. Loan mods are very difficult to get approved for a number of reasons and work out for only a very small percentage of homeowners.
Deed-in-lieu of foreclosure: If you are unable to do eother of the 2 prior options, your lender may agree to a voluntary transfer of your property back to them. Some people feel that this is a better option than an actual foreclosure...but a short sale is almost always a better option than a deed-in-lieu.
Short Sale: If you can no longer afford your mortgage payments and your home is worth less than your mortgage balance a short sale may be your best option. In a short sale you negotiate generally three things with your lender; 1) The approval of your hardship and thier willingness to entertain a short payoff, 2) how the short sale will be reported to the credit bureaus, and , most importantly 3) the treatment of how the defeciency will be handled.
With a short sale, you will be able to become a homeowner again well before you could with a foreclosure or deed-in-lieu on your credit report. And the impact on your credit score has been reported to be much less.
Also, if your lender forgives any deficiency under the terms of your negotiated short sale, the Mortgage Forgivness Debt Relief Act of 2007 may relieve you of any tax libilities for the forgiven debt....check with your tax advisor on this.
Loan Modification: If you are behind on your mortgage payment and can not afford to bring them current and a forbearance agreement will not work with your situation a loan modification is an option. In a loan mod, your lender permanently alters the terms and conditions of your loan in an effort to make your payment more affordable. You have, no doubt, heard or read about the failure of the govt promoted loan mod program, HAMP. Loan mods are very difficult to get approved for a number of reasons and work out for only a very small percentage of homeowners.
Deed-in-lieu of foreclosure: If you are unable to do eother of the 2 prior options, your lender may agree to a voluntary transfer of your property back to them. Some people feel that this is a better option than an actual foreclosure...but a short sale is almost always a better option than a deed-in-lieu.
Short Sale: If you can no longer afford your mortgage payments and your home is worth less than your mortgage balance a short sale may be your best option. In a short sale you negotiate generally three things with your lender; 1) The approval of your hardship and thier willingness to entertain a short payoff, 2) how the short sale will be reported to the credit bureaus, and , most importantly 3) the treatment of how the defeciency will be handled.
With a short sale, you will be able to become a homeowner again well before you could with a foreclosure or deed-in-lieu on your credit report. And the impact on your credit score has been reported to be much less.
Also, if your lender forgives any deficiency under the terms of your negotiated short sale, the Mortgage Forgivness Debt Relief Act of 2007 may relieve you of any tax libilities for the forgiven debt....check with your tax advisor on this.
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