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PDF Version of this article - 10 Underwater Homeowner Options

Slipping toward foreclosure can lead to feelings of anxiety, depression, and loss of self-esteem. Don’t give up. There are options available to help millions of homeowners rescue themselves from the brink. Since it is crucial to act before a foreclosure takes place, now is the most important time for you to review the following options and solutions.

As a Certified Distressed Property Expert (CDPE), I am trained in assessing all foreclosure alternatives and pursuing the best solution for your own financial situation.

1) Short Sale

A short sale allows the homeowner to avoid foreclosure, minimize financial damage and move on from a burdensome, unaffordable mortgage. In many cases, a short sale allows the borrower to qualify for a new mortgage in just 24 months, as opposed to five years or more after a foreclosure.

A trained real estate agent can help facilitate a short sale with your lender if you have three qualifications. First, you must show some type of financial or personal hardship. Second, you must have a monthly shortfall, meaning your monthly expenses are greater than your monthly income. Finally, you need to prove that your debts are greater than the value of your assets (certain investments, property, etc.). These requirements may differ per lender, so check with a distressed property specialist for specific information from your mortgage company.

2) Reinstatement

A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult for homeowners to achieve. The homeowner simply pays the total amount past due (including late fees) to the lender. This solution does not require the lender’s approval and will “reinstate” a mortgage up to the day before the foreclosure sale.

3) Forbearance or Repayment Plan

A forbearance or repayment plan involves negotiating with the mortgage company to allow the homeowner to repay back-payments over a period of time. The homeowner typically makes current mortgage payments in addition to a portion of the back-payments owed. This option requires lender approval.

4) Mortgage Modification

A mortgage modification involves the reduction of one of the following: the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. These changes require lender approval and typically result in a lower payment for the homeowner and a more affordable mortgage.

5) Rent the Property

This option does not require lender approval, but does require the homeowner’s ability to rent the house for enough money to cover the monthly mortgage payment.

It is important to remember that there may be unexpected costs associated with the maintenance of a rental property in addition to the monthly mortgage payments. Homeowners should take this into consideration when deciding whether this option will work for them.

6) Deed-in-Lieu of Foreclosure

Also known as a “friendly foreclosure,” a deed-in-lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must also vacate the property. Deed-in-lieu can potentially lessen the damage to a credit score and future loan eligibility, and sometimes the lender will forgo their right to pursue a deficiency judgment, meaning the homeowner will not be responsible for further payments.

7) Bankruptcy

Many have considered and marketed bankruptcy as a “foreclosure solution,” but this is only true in some states and situations. This does not require lender approval, but you must have non-mortgage debts that you claim as a hardship.

Entering bankruptcy can be a risky and costly process. Be sure to seek the advice of a qualified bankruptcy attorney when pursuing this as an option.

8) Refinance

As opposed to mortgage modification, refinancing means you will be acquiring a new loan based on your current credit standing. If you have already missed mortgage payments, your credit score may make it difficult to find a loan with cheaper payments.

9) Sell the Property

Homeowners with sufficient equity can list their property with a qualified agent who understands the foreclosure process in their area. Unfortunately, many homeowners in today’s market have experienced a decline in home value and may owe more than what the home is worth.

10) Servicemembers Civil Relief Act

(Military personnel only)

If a member of the military is experiencing financial distress due to deployment—and that person can show that the debt was entered into prior to deployment—he or she may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers to help qualify them for this relief.

Pull Yourself Back From the Brink

If you are on the edge, you have no time to waste. Call me today; I’m here to lend a hand.

Place Your Confidence in CDPE

With the right assistance, the stress of facing foreclosure becomes manageable. CDPE- designated agents have received the knowledge and training necessary to assess all possible foreclosure alternatives and pursue homeowners’ best options. A CDPE- designated agent attends several days of intensive, thorough training on foreclosure avoidance and how to help facilitate a short sale efficiently and ethically. The highly regarded CDPE logo means you are working with the most informed, up-to- date resource available.

Michael Collins, CDPE, SFR, BPOR
Broker - Rock Realty
608-921-8536

If you are wondering if a short sale might be right for your home, please visit our Short Sale Home Evaluation page.

The National Association of Realtors and the U.S. Department of the Treasury are collaborating to help Realtors better assist distressed homeowners who are struggling to Selling Your Home Through a Short Sale - Avoid Foreclosure.

Realtors who attend upcoming Making Home Affordable "Help for Homeowners" outreach events, sponsored by the Treasury Department, will learn insights to help them navigate the short sale process and have the opportunity to meet directly with loan servicers on their clients’ behalf for assistance with difficult transactions, according to a statement.

"As the nation’s leading advocate for homeownership and housing issues, Realtors are working hard to keep more people in their homes, and when a family is absolutely unable to keep their home, Realtors specializing in short sales, short sale specialists are there to help homeowners by facilitating a loan modification or short sale," said NAR President Moe Veissi, broker-owner of Veissi & Assoc. inc. in Miami.

"Help for Homeowners" community events will take place throughout the year; the first sessions are in Miami today and Tampa, Fla. on Feb. 24. Additional events are scheduled in Chicago, Indianapolis, Los Angeles, and Sacramento, Calif.

The sessions for real estate professionals are not open to homeowners, but borrowers who are in financial distress and concerned about losing their home to foreclosure are encouraged to attend the free homeowner sessions. Homeowners who are having difficulty paying their mortgage will be able to meet one-on-one with loan servicers and housing counselors to explore foreclosure prevention options and work toward solutions to their mortgage problems. Real estate professionals are encouraged to invite homeowners and their clients to the events and are welcome to accompany their clients in conversations with the servicers.

The Opland Group Specializes in Real Estate Sales, Luxury Home Sales, Short Sales in;  Bexley  Columbus  Delaware  Downtown  Dublin  Gahanna  Grandview Heights  Granville  Grove City  Groveport  Hilliard  Lewis Center  New Albany  Pickerington  Polaris  Powell   Upper Arlington  Westerville  Worthington

Hi Everyone,

We have had some success with a simple underwater mortgage hardship.  I am still hesitant to let that be the only hardship with folks.  Any advice?

Thanks in advance,

Bank of America is making a process change that will reduce the processing time and improve customer service for HAFA Short Sales (Home Affordable Foreclosure Alternative Program) that are submitted with an offer.

The proposed change goes into effect Dec. 1, 2011, and impacts all short sales submitted with an offer in which the homeowner is eligible for the Home Affordable Foreclosure Alternative (HAFA) program.

When a short sale is submitted with an offer and the homeowner is HAFA eligible, we will no longer halt work on the file while waiting to contact the homeowner. HAFA eligible homeowners are no longer required to call our Short Sale Customer Care to indicate whether they will participate in the program.

Instead, real estate agents specializing in short sales can indicate a homeowner's HAFA interest by submitting the necessary documents to Equator within 14 days. During that 14-day window, the short sale will continue moving forward. By the end of the 14 days, if we have not received the requested HAFA documents, we will continue to process the file as a traditional short sale.

This change is being made because we are transitioning the processing of all HAFA short sales with an offer from our outsourced vendor partners to Bank of America associates. A Bank of America specialist will be able to seamlessly transition a file from our traditional process to the HAFA process, thus improving customer service and the borrower and agent experiences. Homeowner's and agents should be aware that Bank of America's outsourced vendor partners will, however, continue to process all short sales submitted without an offer.

Action required:  

Short sales initiated on Equator.com that receive a HAFA eligibility message no longer require homeowners to call Customer Care to confirm their interest.

-  If homeowners wish to participate in HAFA, agents must submit the requested documents within 14 days.  (Note: the 14-day period begins the day the HAFA solicitation letter is mailed to the homeowner. Agents can obtain the date of the letter from homeowner.) 

-  If you are unclear about which documents to submit, contact your short sale specialist via Equator messaging. 

Additional Recommendations:

Homeowners interested in understanding the benefits a HAFA short sale, including the $3,000 relocation incentive at closing are encouraged to review HAFA Program or the HAFA education guide to learn more.

Bank of America also has put together a HAFA Eligibility FAQ for interested homeowners

Are you feeling overwhelmed in your home and mortgage? You are not alone. Many are feeling the same problem and it is growing in numbers.

Both the Military and Fannie Mae have set up web pages to help you through the maze and give you the options that may be available to you to either save your home or complete a short sale.

The short sale does allow you to sell your home for less than what you owe so that the home is not foreclosed. While this is a good option for many, it does have it drawbacks and you need to understand what it entails. Therefore you need to discuss this with an attorney, a CPA, and most important of all a SHORT SALE Specialist such as the SHORT SALE SUPERSTARS.

We have even managed to help our clients save their homes, avoid foreclosure and sale with a small amount of cash out of pocket avoiding a short sale and another actually walk away with cash on a sale that the bank wanted as a short sale.

Please get advice from a TRAINED SHORT SALE SPECIALIST in your area. If you decide to complete a SHORT SALE, your success is determined by how well the listing agent can present to the bank. The banks are overwhelmed and need to have a good trained expert present the packet.

GET HELP NOW.