One of the great tragedies of a shift in the market is that when homeowners get behind on their mortgage payments they are often "upside down" on the house. They simply can't sell it for the amount of money they still owe on their mortgage loan.
Why Do Homeowners Default on Their Loans?
Six Possible Reasons for Default:
1. Obtained a subprime loan
2. Adjustable Mortgage Rate (ARM)
3. Zero down loans
4. Loss of income
5. Unexpected medical or home repair bills
6. Market shift with price declines
Time is of the essence if the homeowner wishes to avoid foreclosure. A professional real estate agent can offer the homeowner several viable options.
Sell home quickly
Negotiate a short sale
Get lender to renegotiate the terms of the loan
What is a short sale?
In a short sale, a financially insolvent homeowner who is facing foreclosure sells his home for less than the value of the loan. The lender accepts the sale as payment in full for the loan.
An experienced real estate agent can help the homeowner with this process. By providing us with the information requested on the following Short Sale Checklist, we can begin short sale negotiations with your lender.
Financial Information
Three most recent bank statements for all checking accounts for all borrowers
Three most recent bank statements for all savings accounts for all borrowers
W2's from the past two years for all borrowers
Income tax returns from the past two years for all borrowers
Past three paycheck stubs for all borrowers
Copies of all bills for all borrowers from the past two months. Will be used to compile a financial worksheet. Could include the following:
Automobile loans
Alimony/child support
Child care bills
All credit card bills
Electricity bills
Gas bills
Water/sewage bills
Home telephone bills
Cell phone bills
Cable bills
Automobile insurance
Health insurance
Life insurance
Doctor bills
Dentist bills
Pharmaceutical drug bills
Food/groceries
School lunches
Gasoline (auto)
Student loans
Other loans
Other bills
Hardship Information
Hardship letter that describes succintly yet persuasively why the homeowner was unable to meet his or her loan payments. The homeowner must write the hardship letter.
Documentation of hardship. Documentation may include:
Hospital bills
Doctor bills
Home repair bills
Documentation of unemployment
Documentation of incarceration
Death certificate
Divorce decree
Other documentation
Property Information
Information about any additional liens on the home.
Recent credit report
Recent Comparative Market Analysis (CMA)
Estimated HUD-1
Estimates for any necessary repairs to the home
Most recent property tax bill and proof of payment status
Proof of homeowner's insurance coverage
Lender Information
Monthly statements from the first and second lenders
Name of supervisor in Loss Mitigation department
Direct phone number for Loss Mitigation department
Short sale application from the lender
Written authorization from the homeowner for the Realtor to speak on his or her behalf
With this information, we can begin negotiations with your lender and help you to avoid foreclosure.
