It appears some banks may start becoming more human and humane. In an effort to stem the tide of vacant homes and struggling homeowners, a few of the banks are stepping forward to try to pre-empt the mortgage meltdown. We are seeing Asset Management Companies (companies hired by banks to manage their "at risk" mortgages and homes) hire Real Estate Agents to try to get in touch with their Borrowers. There's a whole new side of the Real Estate Business out there where agents are actually trying to assist people to stay in their homes.
Orders are sent out from these Asset Management Companies to real estate agents to get in touch with the Borrowers who have missed payments or are at risk of losing their homes. Agents are being a friendly face from the banks to give advice to Homeowners on what their options are and to deliver Loan Modification Applications, pick up and return the paperwork to the banks, or counsel and educate Homeowners on Modifications, Short Sales, Deed in Lieus and Foreclosures.
So, the next time you see a Real Estate Agent at your door, they may not be there to try to get you to list your property so they can make a sale and commission. They may be sent by your bank to help you stay in your home. Please welcome them in see if we can't work together to fix this current real estate market one house at a time.
Showing posts with label deed in lieu. Show all posts
Showing posts with label deed in lieu. Show all posts
Wednesday, November 25, 2009
Friday, April 24, 2009
WHAT'S THE DIFFERENCE?
Foreclosure, Deed in Lieu, Short Sale ... what's the difference and what's the impact on your life and credit score?
Foreclosure is where an owner's right to their property is legally terminated, usually because of default in loan payments. Property is purchased back by the bank at a public auction held on the courthouse steps (or a sheriff's sale in some cases). The bank will usually start the bidding at the auction at the amount currently owed on the property in most cases and anyone who bids over that amount may then purchase the property. They must have financing in place and put up a security deposit and close within a specified period of time. Most states will then zero out any deficiency balance owed by the owner. A Foreclosure is usually the most devastating on a person's credit record and will negatively impact it as much as 280 points plus it will remain on the record for a longer period of time thereby crippling a person's chances of buying anything in the near future.
Deed in Lieu is where an owner can avoid the foreclosure by voluntarily surrendering their property back to the bank by signing over the deed for satisfaction of the debt. This allows the bank to take possession sooner than is possible through a foreclosure action and saves the bank the foreclosure costs. We've seen many cases of this recently where owners simply put their keys in the mailboxes and walk away; however, they must legally do this by signing off the deed and going through a paperwork process. This has less impact on the credit rating but will still cause some negative results.
Short Sale is where the owner is able to sell the home prior to the foreclosure action at an amount of money that is less than owed. There must be a negotiation with the lien holder(s) to agree to take a payoff which is less than owed and must be completed prior to the auction date on the property. Lenders, especially in this market, seem to be more agreeable to accepting a Short Sale as property values have decreased throughout the country and frequently the property is certainly worth less than owed. Snagging a Buyer that is willing to pay over value on the property at a foreclosure auction is not a frequent occurrance, so it is in the best interests of the Lender to negotiate rather than incur the foreclosure expenses. Again, this will have a negative impact on a person's credit rating but not as bad as the formal forclosure. Many real estate agents and escrow companies are well versed in how to proceed with a short sale and are willing to help as Lenders will always agree to include a commission as part of the process.
If you'd like more information on these topics, please don't hesitate to call or e-mail us.
Foreclosure is where an owner's right to their property is legally terminated, usually because of default in loan payments. Property is purchased back by the bank at a public auction held on the courthouse steps (or a sheriff's sale in some cases). The bank will usually start the bidding at the auction at the amount currently owed on the property in most cases and anyone who bids over that amount may then purchase the property. They must have financing in place and put up a security deposit and close within a specified period of time. Most states will then zero out any deficiency balance owed by the owner. A Foreclosure is usually the most devastating on a person's credit record and will negatively impact it as much as 280 points plus it will remain on the record for a longer period of time thereby crippling a person's chances of buying anything in the near future.
Deed in Lieu is where an owner can avoid the foreclosure by voluntarily surrendering their property back to the bank by signing over the deed for satisfaction of the debt. This allows the bank to take possession sooner than is possible through a foreclosure action and saves the bank the foreclosure costs. We've seen many cases of this recently where owners simply put their keys in the mailboxes and walk away; however, they must legally do this by signing off the deed and going through a paperwork process. This has less impact on the credit rating but will still cause some negative results.
Short Sale is where the owner is able to sell the home prior to the foreclosure action at an amount of money that is less than owed. There must be a negotiation with the lien holder(s) to agree to take a payoff which is less than owed and must be completed prior to the auction date on the property. Lenders, especially in this market, seem to be more agreeable to accepting a Short Sale as property values have decreased throughout the country and frequently the property is certainly worth less than owed. Snagging a Buyer that is willing to pay over value on the property at a foreclosure auction is not a frequent occurrance, so it is in the best interests of the Lender to negotiate rather than incur the foreclosure expenses. Again, this will have a negative impact on a person's credit rating but not as bad as the formal forclosure. Many real estate agents and escrow companies are well versed in how to proceed with a short sale and are willing to help as Lenders will always agree to include a commission as part of the process.
If you'd like more information on these topics, please don't hesitate to call or e-mail us.
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