Chris Plumb

In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the borrower. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender. Neither side is "doing the other a favor;" a short sale is simply the most economical solution to a problem. Banks will incur a smaller financial loss than foreclosure or continued non-payment would entail. Borrowers are able to mitigate damage to their credit history, and partially control the debt. A short sale is typically faster and less expensive than a foreclosure. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Lenders often have loss mitigation departments that evaluate potential short sale transactions. The majority have a pre-determined criteria for such transactions, but they may be open to offers, and their willingness varies. A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from an appraisal or Broker Price Opinion (abbreviated BPO).

Lenders may accept short sale offers or requests for short sales even if a Notice of Default has not been issued or recorded with the locality where the property is located. Given the unprecedented and overwhelming number of losses that mortgage lenders have suffered from the 2009 foreclosure crisis, they are now more willing to accept short sales than ever before. This presents a opportunity for "under-water" borrowers who owe more on their mortgage than their property is worth and are having trouble selling to avoid foreclosure as a result.

What Are Your Options?

Reinstatement

When you are behind in your mortgage and the payments are brought current including any legal costs and penalties and you are permitted to make regular payments then your mortgage has been reinstated.

Forebearance or Re-Payment Plan

The literal meaning of forbearance is "holding back."

Loan borrowers sometimes have problems making payments. This may cause the lender to start the foreclosure process. To avoid foreclosure, the lender and the borrower can make an agreement called "forbearance". According to this agreement, the lender delays his right to exercise foreclosure if the borrower can catch up to his payment schedule in a certain time. This period and the payment plan depend on the details of the agreement that are accepted by both parties.

Forbearance is usually for temporary financial problems. If the borrower has more serious problems, for example if it is a variable-rate mortgage and the interest rate becomes unaffordable for the borrower, then forbearance is usually not a solution.

Sell The Property

If a buyer has equity in their property, they can sell it and use the funds from their equity to cure the foreclosure. Unfortunately, many sellers believe that they have to sell much faster than they do and end up taking the first offer that comes along.

Rent The Property

In some cases a homeowner facing foreclosure will have payments low enough to allow him or her to rent his or her property and keep up with his or her mortgage payments. This is however often a short termsolution since when taxes and insurance payments come due, many homeowners cannot afford them. This causes the mortgage company to enforce an escrow account on the property. This will cause the payments to go up and it is very possible that the homeowner will end up in the same situation they were in before they rented the property.

Refinance

If you have sufficient equity and income and your credit has not been too badly damaged, you may be able to refinance. This is also typically a short term solution since the payments on the property typically go up considerably due to the refinance.

Mortgage Modification

A modification to an existing loan made by a lender in response to a borrower's long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default.

Deed-in-Lieu of Foreclosure

A potential option taken by a mortgagor (a borrower) to avoid foreclosure under which the mortgagor deeds the collateral property (the home) back to the mortgagee (the lender) in exchange for the release of all obligations under the mortgage. Both sides must enter into the agreement voluntarily and in good faith.

Bankruptcy

A bankruptcy may stop a foreclosure and allow you to reorganize your debt and keep your property. The reality however is that most of the time this is not the case and the bankruptcy only stalls the foreclosure. If you are not able to make the payments after bankruptcy the house will foreclose anyway.

The other major drawback to bankruptcy is that it makes it very difficult for you to sell your property once you enter the bankruptcy process. It makes it near impossible to negotiate a short sale. The only possibility is if the trustee for the bankruptcy agrees to release the property from the proceedings and allow it to be sold.

Servicemembers Civil Relief Act (SCRA)

MORTGAGES: The SCRA can also provide temporary relief from paying your mortgage. To obtain relief, a military member must show that their mortgage was entered into prior to beginning active duty, that the property was owned prior to entry into the military service, that the property is still owned by the military member, and the military service materially affects the member's ability to pay the mortgage. by -uscg.mil

It is important to note that this relief is only temporary and in many cases the most prudent course of action for a Servicemember, is to sell your home. This is a personal decision based on your specific financial situation.

Short Sale

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan. It often occurs when a you cannot pay the mortgage loan on your property, but the lender decides that selling the property at a loss is better than pressing the current debtor. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrower.

FOR RELEASE: IMMEDIATE
DATE: October 28, 2009

For more information, please contact: Chris Plumb
Phone: 916-230-9087

CHRISTOPHER PLUMB EARNS PRESTIGIOUS DESIGNATION TO HELP HOMEOWNERS IN DANGER OF FORECLOSURE

CHRISTOPHER PLUMB of DAVIS & DAVIS ASSOCIATES, REALTORS, 2237 Douglas Blvd., Ste. 125, Roseville, CA 95661 has earned the prestigious Certified Distressed Property Expert (CDPE) designation, having completed extensive training in foreclosure avoidance and short sales. This is invaluable expertise to offer at a time when the area is ravaged by "distressed" homes in the foreclosure process.

Short sales allow the cash-strapped seller to repay the mortgage at the price that the home sells for, even though it is lower than what is owed on the property. With plummeting property values, this can save many people from foreclosure and even bankruptcy. More and more lenders are willing to consider short sales because they are much less costly than foreclosures.

In the Sacramento and Surrounding areas, SEVERAL THOUSAND homes are in danger of foreclosing. It is happening in all price ranges. Local experts say that even high-priced homes are not immune.

"This CDPE designation has been invaluable as I work with sellers and lenders on complicated short sales," said PLUMB. "It is so rewarding to be able to help sellers save their homes from foreclosure."

Alex Charfen, founder of the Distressed Property Institute in Boca Raton, Fla., said that Realtors® such CHRISTOPHER PLUMB with the CDPE designation have valuable training in short sales that can offer the homeowner much better alternatives to foreclosure, which virtually destroys the credit rating. These experts also may better understand market conditions and can help sellers through the emotional experience, he said.

The Distressed Property Institute opened in January 2008 and provides training on-site and online. The CDPE is the premier designation for Realtors helping homeowners in distress and handling short sales.

"Our goal is to educate as many people as possible so we can help as many homeowners as possible," Charfen said.

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