In April of 2008, James of Scottsdale, Arizona, had a job, his health, and a beautiful home he wanted to sell. Ten months later, he was months behind on his mortgage and facing imminent foreclosure on his house. James was a homeowner in distress, and it took a special agent to help save him.
Gayle Henderson, is a fellow Certified Distressed Property Expert® (CDPE) at RE/MAX Excalibur Realty in Scottsdale, met James as a referral from another agent, who for months previously had worked hard on James’ behalf in the rapidly falling real estate market of Phoenix, Arizona. After the initial listing interview, and with Gayle’s guidance, James decided on a list price that appeared to reflect the current market. However, with no movement on the property by September, Gayle convinced James to agree to a price reduction and listing extension.
As James signed the extension, he said to Gayle, “If we don’t get this sold by the end of January, I will simply take it off the market.”
“Fair enough,” Gayle replied.
“This is the last price reduction I can do,” James said, thinking of his financial obligations. But autumn came and went with little activity and no contracts.
To amplify this tension, a model-match to James’ home, on the same street, entered the market in December at a considerably lower price. Gayle examined the new listing and began calling Richard to let him know they could not compete with that price. Over the next two weeks, her phone messages went unanswered.
Unbeknownst to Gayle, James had encountered serious setbacks over the previous months, both health- and job-related, that turned his world upside-down. When his listing expired on January 31, 2009, James was already six months behind on his mortgage and other bills. His disability payments had run out and, following this, his employer had let him go.
James simply could not bring himself to share this devastation with anyone.
Because of Gayle’s persistence and compassion, James finally confided his story, admitting that the house was going to foreclosure auction in just 16 days.
Fortunately for James, Gayle was trained to handle properties and homeowners facing foreclosure, having earned her CDPE Designation. Understanding the urgency of the situation and the potential for disaster on behalf of her client, Gayle instituted the mantra “All hands on deck!” at her office.
On February 6, James provided Gayle with all of his completed documentation for a short sale—when a lender agrees to accept less than is owed on their existing loan. Working together, James, Gayle, and her group put together a short sale file, updated the listing and the property information, and began communicating with the lender.
“A lucky day,” Gayle admitted in retrospect. “The foreclosure specialist said she would only be able to accept a short sale file if submitted 14 days before auction. I called on precisely that deadline.”
Over the next two weeks, Gayle and her group worked hard to stall the auction, marketing the property aggressively with constant communication between all parties involved. James made sure the house was always show-ready and looking its absolute best. Meanwhile, the lender ordered a property profile and informal appraisal—known as a Broker’s Price Opinion (BPO)—to estimate the value of the house.
Five days over a holiday weekend went by without contact from the BPO agent. Each day was one day closer to an auction that Gayle and her group were committed to stall. They weren’t giving up, and they wouldn’t let James give up either.
“There were days we knew it took every ounce of his energy to keep up the fight,” Gayle said.
On day 12 of their 14-day deadline, Gayle refused to wait any longer for the BPO. Trying to assist the lender in getting the information she needed, Gayle called a BPO specialist to secure a BPO on a rush order, and e-mailed her lender contact with the update and other documentation needed to assess the file. The lender was able to give Gayle the financial guidelines she needed, however circumstances on this file would not allow an auction postponement without a contract.
“The next 24 hours were crazy!” Gayle said. “Everyone in our group was focused on saving James from foreclosure.”
Gayle personally called everyone who had ever shown the house. Finally, on the last day before auction, they got an offer, faxed it to the lender, and the auction was stopped just one hour before deadline. While this contract eventually fell through, James’ hard work and Gayle’s interaction with the contact at the bank allowed them to find another buyer four days later with a solid contract. Thirty-five days later, James and Gayle sat at the title company with a big SOLD sign-rider on the table as Richard signed his final paperwork.
“The sense of relief was enormous and there wasn’t a dry eye in the room by the time we finished,” Gayle said.
* * *
This is a story retold by homeowners in every town across America. It is a situation where homeowners feel alone in the eye of a storm, feeling that no one else could possibly understand. You firmly believe you are alone, not knowing the untold numbers of other financially distressed homeowners who invisibly and silently share your pain.
After the short sale was complete and James was able to move on with his life, he had the following to say:
I want to thank Gayle and her assistant, Wendy, for helping me through one of the most difficult and challenging parts of my life with the housing market spiraling down at a rapid rate. I did not know what to do. … She quickly made a plan of action; but at the same time kept a calmness about the situation that I will always be grateful [for]. Her kindness and understanding, but more important knowledge of the ever-changing real estate market, helped sell my house and kept it from going into foreclosure. I could not have asked for a better person to see me through this, and a simple thanks does not seem enough. Her concern and kindness will not be forgotten.
In complete gratitude,
J.P.
The one reality about today’s housing market is that many people have more questions than answers. The following information is intended to help you or someone you know better understand your situation.
The qualifications for a short sale include any or all of the following:
A mortgage modification is a process through which your mortgage lender changes any or all of the following:
This process can allow borrowers to stay in their property when they can no longer afford their current mortgage payments.
Lenders have realized that in some cases it is better for them to work with current borrowers to lower payments or possibly improve terms in order to keep homeowners in their properties. The average foreclosure can cost a lender from 35-50% of the value of a property, so keeping borrowers in their homes is a good option for everyone.
According to the Making Home Affordable Web site (www.MakingHomeAffordable.gov), you will need the following information for your lender to consider a modification:
If applicable, it may also be helpful to have a letter describing any circumstances that caused your income reduce or expenses to increase (job loss, divorce, illness, etc.)
The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):
Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP).
For a list of mortgage lenders and servicers, visit www.HopeNow.org.
If Fannie Mae or Freddie Mac owns your mortgage, you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.
You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale. Agents with the Certified Distressed Property Expert® Designation have undergone extensive training in how to process and negotiate short sales.
A short sale allows you to sell your home for less than what you owe and avoid foreclosure. Speak to your market expert to see if you may qualify.
According to the resources released by the government, following are a list of qualifications:
Call Joe Graham today for a no obligation consultation. 630-452-1648
Options other than Foreclosure
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Reinstatement |
This is where the homeowner reinstates the mortgage by paying up all missed payments and fees and becomes current with the mortgage. After all the fees have been paid up then the homeowner can continue to pay the mortgage payments as they had.
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Forbearance |
More commonly known as a re-payment plan, allows the homeowner to negotiate a repayment of missed payments and fees to reinstate the mortgage.
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If there is equity in the property then the home can be sold and the foreclosure can be "cured" thus avoiding the foreclosure. If the home is worth less than is owed plus sales expenses then a short sale must be negotiated (See the section on "Short Sale Explained").
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Rent the Property |
The property can be rented however the mortgage must be made current. A rental agreement will not stop the foreclosure process.
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Refinance |
If the credit rating hasn't been too badly damaged, a refinance may help especially if the monthly payments can be reduced.
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Deed-in-Lieu of Foreclosure |
Commonly known as the friendly foreclosure, this involves for the bank to agree to foreclose and take the property back without the lengthy process. This is not recommended for properties with equity because the owner gives up the right to the property and any equity. This option is technically still a foreclosure and will show up as such on your credit report. Sometimes the bank will forgo any other recourse but that will also have to be negotiated.
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It cannot avoid the foreclosure but may allow the owner to reorganize debt and stall the foreclosure. Another drawback is that it makes it difficult to sell the property and almost impossible to negotiate with any third parties.
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When the homeowner owes more than the property is worth plus sales expenses, a sale can be negotiated and an approval obtained from the bank to accept an amount less than is owed.
Most of the options above involve negotiation with the bank and a decent credit rating. If the credit has been affected already, then the only real option that can help is the short sale.
I CAN HELP! AS A CERTIFIED DISTRESSED PROPERTY EXPERT I HAVE THE KNOWLEDGE AND EXPERIENCE TO HELP YOU OR SOMEONE YOU KNOW THROUGH THEIR TIME OF DISTRESS. WHATEVER YOU CAN DO, AVOID FORECLOSURE!
CALL TODAY AT 630-452-1648 FOR A CONFIDENTIAL, NO OBLIGATION APPOINTMENT TO DISCUSS YOUR SITUATION AND OPTIONS.
10 Reasons to Avoid Foreclosure
- Joe Graham, 630-452-1648
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