HELPING HOMEOWNERS KEEP THEIR HOMES

 

BECAUSE WE ALL NEED A HELPING HAND!

In these times, we all know someone who is in distress for various reasons: job loss or loss of income, family sickness, high interest mortgages that are resetting or are about to reset. While most people are not comfortable discussing their financial hardships, here is some information that I believe might help someone you know.

CURRENT PROGRAM HIGHLIGTHS:
The federal government has allocated funding to help pay the mortgages of qualified homeowners who are unemployed or underemployed through no fault of their own. Troubled homeowners throughout California who want to apply for HHF financial assistance will be able to do so via this website listed below. If you are in other States, there will be programs available to you, as these are federally funded programs.

Unemployment Mortgage Assistance Program (UMA)
Mortgage assistance of up to $3,000 per month for unemployed homeowners, who are collecting or approved to receive unemployment benefits from the State of California’s Employment Development Department.

Mortgage Loan Reinstatement Payment (MLRP) Program
For eligible homeowners who have fallen behind on their mortgage payments.
Funding of up to $25,000 to help qualified homeowners catch up on their mortgage payments

For additional information (including detailed eligibility criteria) and/or to apply for these programs, visit the HHF website at http://keepyourhomecalifornia.org/programs/

While NOT all homeowners may qualify for this program, it would not hurt to navigate through the above website to explore all the available options before being forced to a short sale or a foreclosure.

In the event the above programs are not helpful, a short sale is a better option than a foreclosure; as the foreclosure is a harder hit to one’s credit worthiness. In addition, there are other government initiatives that currently make short sales much easier and attractive to homeowners. Another viable option for upside down homeowners is another goverment initiative that allows home owners to refinance their home without an appraisal, this is the HARP program.

Because of my extensive experience with distress properties, I keep up with the current legislation that helps homeownership in the challenging CA housing markets.

WHAT IS A SHORT SALE?

A Short Sale occurs when lenders agree to allow a homeowner to sell their home for less than the home owner owes on their home loan. This kind of a sale has to be approved by the lender any time the sale of a home will not be able to pay off the associated home loan from the sale. Someone has to take a loss, and it is usually the bank; in the form of the approved short sale. It is one of the options a borrower may have to avoid foreclosure of their home.

The seller is still the owner of the property in question; however, in order to transfer title to potential purchaser, the lender must release the lien on its collateral to the loan given to the borrower, which is the house.
Not all lenders will accept short sales or discounted payoffs, especially if they believe they will get more money from foreclosing and selling the home themselves.
Not all sellers or all properties qualify for short sales.

Why A Short Sale:

For Buyers:
Prices might be lower than with a bank owned property becuase the competition on short sale homes is less than with a bank owned;
While the home may need some deferred maintenance issues resolved, the repair issues in an occupied home many times are less severe as the repair issues with a bank owned home;
Seller will provide seller’s disclosures outlining the history of the home;
The buyer will be able to take possession of the home on the same date that they close;
The closing will be handled by a title company and the buyer will be able to get marketable title instead of insurable title.

Do Short sales work?
Yes, they do work but you must work with an agent that understands the intricacies of short sales transactions. There are many things that need to be taken into consideration when assessing if you as a buyer want to put an offer on a short sale home. For instance, your agent must find out how many lien holders there are, who the lien holders are, are there any offers in the works, is the property going to go be taken off of the market while the bank decides if the sellers accepts the offer? Etc.

For Sellers:
Short sales appear on your credit report as "pre-foreclosure in redemption", not as "debt discharged due to foreclosure"
A short sale can help homeowners avoided further collection activity or a foreclosure action;
Sellers can help maintain property values by ensuring that the listing agents are doing their homework with the listing price;
Sellers that remain in their home help decrease vacant homes in the neighborhood which attracts vandalism and subsequently decline in values;
There is a new law that comes into effect April 4th, 2010; where seller might qualify for 1500.00 relocation fees under the HAFA PROGRAM.

On the sale side, a good listing agent will list the property at a reasonable price; otherwise, the bank that has a lien against the property will not approve the sale price in the short sale. The property must be heavily marketed and once an offer is received the listing agent must submit a “short sale package” to the lien holder as soon as possible. This package is quite extensive, but is necessary if the lender is going to agree to take a substantial loss on a short sale. Sellers must consult with a CPA for possible tax ramifications.