FAQ
Q. What is foreclosure?
A. Foreclosure is the process in which a lender takes back a property they have financed. They do this when the borrower is behind on house payments and unable to catch up. There is a legal time frame that determines how long the foreclosure process can take. In Oregon a notice of default can be filed after the borrower is 90 days late and foreclosure normally takes 120 days after the notice of default is filed.
Q. I’ve already talked with my lender and they just want their money. Can you still help me?A. Time is of the essence when you are behind on house payments. Each day that passes makes it that much harder to get an agreement worked out with your lender.
Q. What is a Short Sale?
A. A short sale occurs when a lender agrees to be paid less for a property than what is owed on the mortgage. Consequently, the lender is agreeing to take a loss on the loan to avoid having to go through the foreclosure process.
Q. Why would a lender agree to accept less than what they are owed?
A. It comes down to numbers. A short sale will usually result in a considerably smaller loss for the lender than a foreclosure would because of the holding time during which the property will likely sit vacant.
Q. What is the impact of a short sale on my credit?
A. A huge benefit to the homeowner is that they are spared a foreclosure on their credit report which can be as much as a 330 point difference.. A foreclosure not only affects your ability to purchase on credit, it also can raise your interest rate on credit. Worst of all it stays with you for life and makes it difficult to purchase another home for 5-7 years. A short sale is noted on your credit report with a designation such as “Paid in Full.”
Q. What are the necessary conditions for a short sale?
A. The property must be over leveraged and the homeowner must be experiencing some kind of hardship. It is possible to short sale a house before the owner is late on a payment if they can prove an impending hardship. A hardship could include job loss, divorce, relocation, illness, mortgage adjustment, and a whole host of other reasons.
Q. How does short sale mitigation work? How long does it take?
A. The goal of loss mitigation is to work out an agreement between the homeowner and the lender(s) that will resolve foreclosure permanently. We (or your Realtor) get a variety of financial documents from you and then begin the processing and negotiation work with the lender. It is not unusual for a short sale to take 3 to 4 from start to finish. A few are quicker, others longer.
Q. Do you charge for your services? How do you get paid?
A. No, you are never charged anything. We seek to get a loss mitigation fee paid by the lender along with the real estate commission for the Realtor.
A. Sure, if that is what you prefer. There are, however, debt to income guidelines you must meet and lenders will rarely lower the mortgage balance you owe. Since many homeowners are still left owing much more than their home is worth, they opt to do a short sale and relieve themselves from the debt.
A. Yes, however, it is quite rare for a 1st lender to do so. 2nd’s are more likely to but our goal in loss mitigation is to have all lenders wave their right to a deficiency. We can not guarantee they will but, up to this point, we have not had a lender pursue a homeowner for a deficiency. It is possible, however, and we recommend that you talk to an attorney about this issue.
A. Yes, but if this is your primary residence which you’ve lived in for the last two out of five years you should avoid any tax consequences. Likewise, if you can show insolvency you will likely not owe any taxes either. Again, we recommend that you talk to a CPA about this issue.
Q. Do I have enough time to stop my foreclosure?A. Up until the foreclosure sale occurs there is still hope. If a sale date for your house has been set you need to act fast. We have stopped sales on their auction day, but this is quite risky and some lenders will not agree to it. Within 5 days before the sale date the lender does not even have to accept a reinstatement that brings the loan current. You’re best option is to take action now to stop foreclosure before it goes too far.
A. Maybe. The American Bar Association has reported that 96% of homeowners who declare bankruptcy end up losing their home to foreclosure anyway. So, if you declare bankruptcy you will likely end up with both a bankruptcy and a foreclosure on your credit report. That being said, there certainly are times when bankruptcy is appropriate and we recommend you consult a attorney to explore this option.
A. Yes. It is possible for a third party to negotiate on your behalf while you are in bankruptcy. But we cannot finalize an agreement with your lender until your mortgage has been discharged or dismissed from the bankruptcy proceedings.
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