Colorado Springs Real Estate

Foreclosure Avoidance Options

Foreclosure is one of the most devastating financial challenges that a family can face and one that many times can be avoided. The options available to residents for foreclosure are many, including but not limited to short sales. Following is a brief explanation of these solutions:

Reinstatement

 A reinstatement is the simplest solution for a foreclosure, however it is often the most difficult. The homeowner simply requests the total amount owed to the mortgage company to date and pays it. This solution does not require the lender's approval and will 'reinstate' a mortgage up to the day before the final foreclosure sale.

Forbearance or Repayment Plan

 A forbearance or repayment plan involves the homeowner negotiating with the mortgage company to allow them to repay back payments over a period of time. The homeowner typically makes their current mortgage payment in addition to a portion of the back payments they owe.

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 typically result in a lower payment to the homeowner and a more affordable mortgage.

Rent the Property 

A homeowner who has a mortgage payment low enough that market rent will allow it to be paid, can convert their property to a rental and use the rental income to pay the mortgage.

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.

Bankruptcy

 Many have considered and marketed bankruptcy as a 'foreclosure solution,' but this is only true in some states and situations. If the homeowner has non-mortgage debts that cause a shortfall of paying their mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.

Refinance

 If a homeowner has sufficient equity in their property and their credit is still in good standing, they may be able to refinance their mortgage.

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 their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act. The American Bar Association has a network of attorneys that will work with servicemembers in relation to qualifying for this relief.

Sell the Property

 Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.

Short Sale 

If a homeowner owes more on their property than it is currently worth, then they can hire a qualified real estate agent to market and sell their property through the negotiation of a short sale with their lender. This typically requires the property to be on the market and the homeowner must have a financial hardship to qualify. Hardship can be simply defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more.

This represents only a summary of some of the solutions available to homeowners facing foreclosure. Locate a RE/MAX Properties, Inc. CDPE Certified Agent for an evaluation of your individual situation, property value, and possible options.

Understanding your options now could mean all the difference in the world.

A CDPE can help!

For more information on Short Sales, click HERE!

Colorado Springs Short Sales, The Impact of Short Sales on Your Home and Our Colorado Springs Community

Colorado Springs Short Sales: The Impact of Short Sales on Your Home and Our Colorado Springs Community

COLORADO SPRINGS, CO, Sep 10, 2010 - No matter where your financial status falls in today's wide economic spectrum, an understanding of Colorado Springsreal estate short sales and how they affect the value of all homes within our community is becoming more and more important.

"Hardly a day goes by without at least one person asking me about the implications of short sales-either in terms of how it affects them as a home seller, or what it means to them as a buyer looking for a great opportunity," says Joe Clement, Broker/Owner of RE/MAX Properties, Inc.. "That's why our company and our sales associates believe it's critical to proactively communicate accurate information about Colorado Springs short sales."

Accounts of distressed, or so called "under water" properties, seem to be a daily occurrence. According to Clement, the term "under water" was coined to describe the condition of the outstanding balance of a mortgage exceeding the market value of the home. If a property is under water but the homeowner is current with their mortgage, the situation is of less consequence. If a homeowner stops paying their mortgage, however, lenders have little option but to act. This can result in the forced sale of the property.

When a mortgage lender enables the sale of a property for an amount less than the mortgage balance, this is a "short sale." "The problem is, the lower prices that short sales generally command on the market can negatively affect the value of other properties in the Colorado Springs community ... including yours and mine," explains Clement.

Homeowners facing financial challenges need to have a better understanding of their many, and in some cases better, alternatives, adds Clement, including loan modification, deed-in-lieu, and foreclosure.

"Understanding short sales is particularly important for today's home buyers," explains Clement, "so that they fully understand both the opportunity and the financial return that a short sale-related property purchase can represent ... as well as the pitfalls." Consulting one of the 130 RE/MAX Propreties, Inc. Associates who have specialize training through the Certified Distressed Property Expert (CDPE) certification, could make a world of difference to a seller facing a short sale or foreclosure situation. Our CDPE certified associates have attended extensive specialized training making them valuable resources and assests to their clients who are in a distressed property situation.

For detailed information about short sales, please contact one of our more than 130 Broker Associates who are Certified Distressed Property Experts (CDPE) at info@WeSellMore.net, or RE/MAX Properties, Inc..

RE/MAX Properties, Inc. has been the number one residential real estate brokerage in Colorado Springs since 1989. The company has 230 full-service professional Broker Associates that service all areas of Colorado Springs and surrounding areas in addition to relocation clients worldwide. The four RE/MAX Properties, Inc. locations are open seven days a week. More information can be found online at www.HomesColorado.com.

10 Short Sale Myths and 1 Truth

Leave a Comment >

March 11, 2010 15:40:23

Alex Charfen, Co-Founder & CEO Distressed Property Institute More than a year into the housing crisis, Alex Charfen, Co-Founder and CEO of the Distressed Property Institute, is exasperated that many homeowners facing foreclosure don't attempt to modify their loan or sell their home.

"I have to do a better job getting the word out," Charfen said, referring to a recent Cromford Report showing that roughly 80 percent of homeowners nearing a foreclosure do not have their home on the market.

Charfen co-founded the Distressed Property Institute in January 2007 after more than a decade as a real estate agent helping distressed homeowners find solutions to their difficult situations. The organization trains realtors on distressed property sales and offers a Certified Distressed Property Expert designation to licensed agents who complete a training course. The training walks agents through every step of the process, including all the documents banks need. These highly-skilled broker associates then help distressed homeowners work with lenders to approve a sale for a price less than the amount of their existing loan - known as "short sales."

Avoiding foreclosures not only helps the homeowner's credit rating, Charfen said, it also helps protect area home values.

Today, more than 14,000 agents in the United States have the CDPE Designation.

::::::::::::::::::::::::::::::::::::::::::::::

Myth 1: You must be behind on your mortgage to qualify for a short sale. Lenders look for three things: a "verifiable hardship," such as a job loss, pay cut, job transfer, divorce or serious illness; a monthly cash-flow short-fall or pending shortfall and insolvency; or lack of liquid assets that would allow you to pay down your mortgage. Charfen said distressed homeowners often wait too long, and should consult with a qualified agent before burning through savings or trying such desperate measures as using a credit card to cover mortgage payments.

Myth 2: Short sales rarely get approved. Charfen has an 85 percent success rate for closing short sales. However, they still take patience, requiring anywhere from 30 to 120 days for lender approval.

Myth 3: Banks would rather foreclose than approve a short sale. Charfen said banks typically lose 35 percent more on a foreclosure than a short sale. They also avoid the hassle and liability of vacant properties if they can approve a sale before foreclosure.

Myth 4: There's no time to negotiate a short sale. It's always worth a try. In one instance, a broker associate learned on a Friday that an elderly couple's home would be foreclosed on the following Monday. With minutes to spare, she worked with the lender to postpone the foreclosure (the case is still pending).

Myth 5: It's fine to make simultaneous offers on short-sale properties. While it may be legal, Charfen bristles at buyers making offers on short sales that are not sincere. Multiple offers clog the system and could force sellers who think they have a solid offer into foreclosure when the offer is rescinded.

Myth 6: A short sale is a fire sale. Not just any offer will do. Home sellers may counter; their agents can only bring reasonable offers to the bank, which typically means a little less than market value.

Myth 7: Anyone can help navigate a short sale. Charfen suggests home-owners find a broker associate with special training in handling distressed properties.

Myth 8: A short sale is not worth the effort. For buyers, short sale properties are often in better shape than foreclosures and are priced to sell quickly. For sellers, there is no lasting stigma for completing a short sale.

Myth 9: Short sales are as financially damaging as foreclosures. Unlike foreclosures, short sales are not reported on a person's credit history and don't present problems with employment or security clearances. Home-owners who undergo a foreclosure are ineligible for a Fannie Mae-backed mortgage for five years, while a home-owner who closes a short sale is eligible for a Fannie Mae-backed mortgage after only two years.

Myth 10: Short sale negotiations are adversarial. Charfen still hears from buyers' agents who loathe short sales. He once felt the same way. "I'd been told by some you have to be heavy-handed; it's adversarial," he said. "I can't stand high-blood-pressure conversations. I've never been able to do that." Charfen said successful short sales are more a matter of communication and organization - having all the paperwork in order and knowing exactly who needs what when in order to help banks approve a sale.

1 Short Sale Truth: It can be a hassle, but it beats a foreclosure!

::::::::::::::::

By Joe Clement, Broker Owner RE/MAX Properties, Inc. Colorado Springs, CO

Joe Clement is the Broker Owner of RE/MAX Properties, Inc. with four offices in Colorado Springs and over 125 Broker Associates with the specialized designation of Certified Distressed Property Expert.