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DISTRESSED PROPERTIES!
Here Foreclosures, Short sales & Problems
I have recently completed a training course, CDPE (Certified Distressed Properties Expert) which is one of the best trainings I have attended in my 25+ years in Real Estate. This course concentrated on both how to handle distressed properties but also on the events which lead up to the problems. We have to remember that there are many reasons people find themselves in this situation, most of which are out of the control of the homeowner, and no one wants to go through this much stress!
If you are having trouble paying your mortgage what should you do?
#1 Don't panic! Call your lender or loan servicer and ask for their help. You may qualify to have the terms of your loan modified which could allow you the opportunity to stay in your home. This can be difficult and you must be persistent.
#2 The next step is to seek help from a professional to modify your loans. Do not pay anyone an up-front fee to do this for you! This practice is illegal in most local jurisdictions and will be outlawed in Virginia soon. If you must pay someone to handle this, require that the payment be made after the modification is completed to your satisfaction! The Department of Housing and Urban Development (HUD.GOV) has a list of approved organizations which will assist you, generally at no charge.
#3 The short sale is your next option. This is a very difficult and frustrating process and should be handled by a professional Realtor who has received the CDPE designation ( I have 35 in my office alone!). These Agents have been trained how to prepare and present your property to buyers and your bank. In many cases the Lender will forgive most if not all of your negative balance and if you qualify, the IRS will waive the income from the forgiven debt. Always consult a tax Professional to determine how the IRS rules apply to you!
#4 The last choice you should consider is foreclosure! This is the most difficult and damaging courses of action you can take. Currently most banks are very slow to foreclose on a home, it is the least attractive option for them and the most expensive! The last thing they want is to add another property into their REO (Real Estate Owned) inventory.
You should do everything you can to avoid going to foreclosure. Many people do not realize that there are viable options which can seriously reduce the damage to them and their financial future. This is one of the most stressful problems you will ever encounter, and it is easy to become depressed and just give up. Don't let the circumstances cloud your judgment. You will make it through this!
Let's look at the effect of your options. If you can negotiate a loan modification you can save a lot of damage to your credit and save your home for your family. The short sale is your next best option. There are many different opinions on the effect of short sales but there is a consensus of opinion that you will be able to restore your credit and once again buy a home in 2-4 years. A foreclosure will continue to affect your credit for at least seven years and it will probably take at least that long to purchase another home. Ultimately it is your choice which option to follow and I wish you well whichever way you choose to go.
One very important note is to seek professional guidance before deciding which option to pursue. If you can, ask an accountant about your particular case. At the very least call the IRS for information and guidance. You do not want to go through this process to find you have avoided the loss however you now owe a large Income Tax debt to the IRS because you didn't check things out in advance!
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