If you behind on your mortgage payments or facing foreclosure of your Long Beach home, you may be wondering what your options are. My team and I have worked with lots of homeowners in this situation. We’ve been able to help homeowners successfully avoid foreclosure even when the trustee sale was just around the corner.
One of the first options that many homeowners explore is a loan modification. Sometimes, though, even if the bank agrees to reduce the payment, it’s not enough to reduce the financial stress on the homeowner. With negative equity, refinancing can be a challenge.
Doing a short sale is another possibility. But what exactly is a short sale?
A short sale occurs when the lender agrees to take less than the full amount required to pay off existing loans in full because the outstanding loan balance is greater than the proceeds realized from the sale of the property.
If you’re considering a real estate short sale, knowing why your lender does not want to foreclose on your home is crucial to the negotiating process. It’s oftentimes much more expensive for the lender to modify your loan than it is to simply foreclose on you and sell it, or accept a short offer and pay all the associated sales costs.
Frequently, we talk to homeowners who are concerned about tax consequences or continued liability for the debt. They are concerned that they will have to pay for the costs of the sale out of pocket. However, when the bank approves a short sale, they approve the payment of the costs of sale from the proceeds. About 99 percent of those who short sale their homes do not face tax consequences. And in California, lenders who approve short sales cannot legally pursue the deficiency or unapid debt.
Our team can help review values with you and provide you with information about the documentation and process for a short sale.
How do you know if you will qualify for a short sale? It used to be that lenders wouldn’t even consider a loan modification or short sale if your payments were current, but that’s not always the case anymore. If you have some type of financial hardship (including decrease in pay, job loss, divorce, death, excessive debts, decrease in home’s value, etc.), you may be an ideal candidate for a short sale.
If you’d like more information on fighting foreclosure of your Long Beach home, email us at [email protected] and we’d be happy to provide you with a free E-Book on Fighting Foreclosure.