At times you can least afford to NOT KNOW the answers it seems hardest to find them when dealing with a distressed property situation. When you hear the word “distressed” many associate that with a property that needs some TLC but that is not always the case. There are also “distressed sellers”. These are people who never in their wildest dreams thought they would be on the brink of not being able to pay their mortgage payments or are already behind and have no idea where to turn since the banks have turned them down for refinance or loan modification.
That brings me to the very first thing everyone should do when faced with this crisis; try to work with your bank or loan servicer to modify the loan. One of the biggest misconceptions is they will just work with you as it just doesn’t work that way. You must qualify for the loan modification just like you qualify for a loan and for some people that is just not possible. However, there are some additional things you can do that could enable you to not have to go through the foreclosure process.
As a Certified Distressed Property Expert, CDPE and Realtor, I am qualified to help you evaluate this process. I want to cover is a new law that goes into effect on April 5, 2010 called HAFA or Home Affordable Foreclosure Alternatives and is also referred to as the “April Program”. Under HAFA, participating banks must work with you to help you avoid foreclosure and there are valid reasons, as a consumer, to avoid foreclosure. This government program is streamlining and giving alternatives incentives to foreclosure.
The alternatives under HAFA are:
- Short Sale
- Deed-in-Lieu
Short Sale – If you owe more on your home than it is currently worth, you have to work with a qualified CDPE Realtor to initiate a short sale where the bank will take less than the current balance of your mortgage.
Deed-In-Lieu – This is when the bank agrees to accept the deed of your home instead of (in-lieu of) foreclosure. You don’t get to keep the home but you do avoid foreclosure.
You can find FAQ’s about HAFA and why you should consider a short sale.