Short Sale, Short Payoff, Loan Modification – What to do?
Time is of the essence if you are an owner of real property and are facing the possibility of a distressed sale or foreclosure of your property. It is strongly recommended that you seek the advice and guidance of qualified professionals such as an independent attorney at law, consumer credit counselor, a certified public accountant, tax consultant or a qualified foreclosure/loan mondification consultant about your unique circumstances.
These types of professionals or consultants can help you to evaluate, consider and decide many issues and potential remedies. Some options are:
- Modify your loan(s)
- Consider a short payoff of loan(s)
- Attempt a short sale of the property
- File for Bankruptcy
- Allow a foreclosure to proceed
A workout can include special forebearance allowing the delinquent payments to be recapitalized or added to the end of the term or forgiven.
A loan modification may allow a change to one or more terms of the loan such as interest rate, length of time of the loan, amortization, and/or loan balance.
A short payoff settlement specifically applies to Second Trust Deeds where the lien must be completely unsupported by equity, and you must have funds to settle with the typical amount needed of 5% to 15% of the balance owed. The property need not be sold.
A short sale is a transaction in which a lender allows the real property securing the loan to be sold for less than the remaining mortgage amount and accepts the proceeds as payment in full of the loan. Some lenders are reluctant to offer this language. Work with a professional real estate agent who knows how to obtain this forgiveness from the lender.
It is important to know that the loan modification process is a 45 to 90 day process; principal reductions are rare occurrences (3% – 4% of cases); a property owner with a Trustee Sale Date less than 30 days away is too late to help. So if you are behind in your payments, have been served with an NOD (Notice of Default), or have a financial hardship that will expose you to an NOD, seek help immediately.
Hardships can be loss of work, job transfer, divorce, a health related incident affecting the wage earner directly or a loan product problem such as a loan with balloon payments or an ARM adjusting to a high interest rate.
Don’t delay. Get the facts. Call Pat Monahan at (714) 932-5529 for a free consultation.
Tags: Modify Loan, Short Payoff, Short Sale
