What’s my personal Liability in a Foreclosure?

Foreclosure has many harsh realities, even if you lose your home through foreclosure you may still be personally liable for the difference between your mortgage loan balance and the current market value. The difference owed to the lender is also called a deficiency. In California there are anti-deficiency rules that might protect you from personal liability, but it also depends on a case by case basis.

If it is determined that you are responsible for the deficiency owed to your lender, the lender can obtain a judgement against you and potentially garnish your wages among other things.

You may not be protected against personal liability under any of the following circumstances:

Second Mortgage – If you have a second mortgage and the first forecloses you are still responsible for the deficiency

Fraud – If you committed fraud in anyway when you acquired the loan you may still be held responsible.

Damage the property – If you dame the property in anyway prior to vacating it, you may still be liable.

FHA and VA Loans – If you have a loan insured by the government, you may still be liable for the deficiency.

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When is a Short Sale the best option?

When we think of a short sale situation we usually think of a homeowner experiencing a hardship and not being able to pay the mortgage. But, the truth is that a short sale should also be considered on more situations than just a distressed situation. The ultimate goal of a short sale is to position the homewoner in the best fiancial situation to be able to buy again. An example would be someone who is upisde down or underwater, which ever expression you prefer, and a modification only lowered their payment and not the pricipal. The bottom line is that with a short sale a person in this situation would save more money by doing a short sale and positioning to buy again in as little as 3 years at a much lower price, with better interest rate and with a potential large down payment. Analyzing the numbers and seeking the long term financial health should be priority before considering to keep a home under water.

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Consider These Alternatives To Foreclosure

Dealing with foreclosure can be a very overwhelming and stressful situation for every homeowner. Its very important to know and understand the process in order to search for a solution or alternative to foreclosure. The more time you have the better your chances will be to fix your situation.

Consider These Alternatives To Foreclosure

1. Loan Workout

If you experience difficulty in paying your mortgage, you should contact your lender immediately and try to work with your lender on a solution to you r circumstance. Your lender might agree to lowering your payments temporarily or provide some other type of relief.

2. Loan Modification

If your financial situation is severe or long term, work on a loan modification with your lender. A loan modification changes any term or terms on your loan in order to lower your payment to an affordable amount. Also consider working with a housing counselor. Remember that HELP IS FREE!!

3. Short Sale

Another way to handle a distressed loan is to sell the property before the bank sells it. Working with a Real Estate profesional may also be beneficial since they may be able to provice more assistance through the process.

4. Deed-in-Lieu of Foreclosure

This is a voluntary agreement between thew borrower and the lender in which the borrwer hands the title to the property back to the lender in full satisfaction of the loan secured by that property.

5. Bankruptcy

This is a federal proceeding for settling your debts.

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Getting Your Offer Accepted In A Sellers Market

I’m today’s tough market many buyers are reaching the point of desperation due to so many denied offers. Here are some tips to get your offer accepted.

1. Understand the market in your area and ask your Realtor how high are the offers that are being accepted. The market is very competitive and prices are going up. Many offers are being accepted 5 to 10 thousand above asking price. Anything above 10 thousand can create an issue with the appraisal and agents do not take extremely high offers seriously.

2. Many buyers feel that is the sellers responsibility to cover several costs to include the buyers closing costs. However, everything in Real Estate is negotiable and the less you ask of the seller the best opportunity you will have.

3. Financing is another big question and my suggestion is put as much money down as possible. If you are able to avoid FHA or VA financing the better your offer is considered to be by the seller. If you have no option but to use FHA or VA look for a lender that can close in 30 days in order to compete with conventional offers.

4. Write a letter to the sellers introducing your family and why that home is your dream home.

5. Consider using the sellers preferred lender if they have one they work with. This will ensure the seller that their preferred lender will close the deal.

6. Adjust your expectations according to the market and carefully evaluate each home your Realtor shows you. Satisfy your needs and your wants can be added later once you have the home. The more homes you consider and make offers on, the better your chances will be.

7. Be patient and have an open communication with your Realtor. Have your Realtor educate you on the market and act quickly when new homes hit the market.

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Know Your Options To Foreclosure

Facing foreclosure can be very overwhelming and stressful, but if you know your options you can take an active approach to resolve your situation. Many homeowners with distressed loans often ingnore their alternatives to foreclosure until it’s too late. Don’t make that mistake. Consider your options right away and take an active approach to the situation. The more time you allow yourself to work out a solution the better chances you will have and the more viable your options may be. Things may seem very difficult, but now is not the time to falter. Knowledge and determination will give you the resolve you need to overcome the financial challenges you maybe be facing right now.

We host a workshop/seminar every monday from 7pm-830pm at the Coldwell Banker Alliance building in Whittier. Come learn about your options and educate yourself on your options.

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