These are challenging times in the American economy, to say the least! Many California Homeowners have been hit particularly hard with loss of equity, wacky loans, and loss of jobs. It is imperative that all options are evaluated, and the one that best fits the situation is put into motion.
If a homeowner wishes to SAVE their home they may choose:
- REPAYMENT - The mortgage holder agrees to add delinquent payments to the current monthly payment. If a loan is simply late, not upside down, this may be a good choice.
- FORBEARANCE - The late payments are added to the balance and it will be dealt with in the future.
- MODIFY - Change the payments or loan balance.
- SHORT REFINANCE- The mortgage holder(s) agree to refinance at current market value even though the balance is higher than market value. For example, home is worth $500K, mortgage is $650K, so lender agrees to refinance and lower balance to $500K.
If a home-owner wishes to LET GO of their home they may choose:
- FORECLOSURE - Once a loan is in default the lender can take legal recourse by:
- 1. Judicial Foreclosure - Homeowner goes to court and owes legal fees.
- 2. Non-Judicial Foreclosure - Homeowner gives up right to recourse and does not go to court. Most common in CA.
- DEED-IN-LIEU - The deed is signed over to the lender holding the mortgage upon mutual agreement between the borrower and lender. This is not that common, but does have its place.
- BANKRUPTCY - This judicial process does not make the home mortgage go away. A Short-Sale is often done before or after a BK.
- SHORT-SALE - The homeowner chooses to sell their home SHORT of the current mortgage amount. A hardship package is completed and submitted along with a buyer's offer, to the lender(s) holding the mortgage.
Each "option" has many details that need to be explored with the appropriate professionals: Accountants, Attorneys, and REALTORS. Yes, it is complicated, but the BEST choice for YOU can be determined after careful exploration of the process. Share the word.
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