Are You Facing Foreclosure?

Before you give up and submit to foreclosure, try a short sale instead — a sales transaction in which the seller’s mortgage lender agrees to accept a payoff of less than the balance due on a loan.

Many mortgage lenders are agreeing to short sales as an alternative to taking over delinquent properties. “This year, short sales will be a monumental part of the marketplace,” says Ron Russell, president of Russell Real Estate Services. “Use a short sale to get from under a mortgage. If you follow your loan officer’s advice and you maintain clean credit and make payments on time, in two years, you can purchase a new home.”

If an agent or attorney is working with you, you will require a Letter of Authorization giving the lender permission to discuss your loan with this outside party. You and your representative should also prepare a detailed letter outlining your reasoning and request for a short sale. It should include market analysis, the sale price you expect to receive, unpaid loan balances, closing costs and real estate commission. You should also include information on your financial situation, including the reason behind your falling behind on mortgage payments. Be honest about your income and assets and provide copies of bank statements.

When a prospective buyer for your property is found, the contract must state that the sale is contingent upon the lender’s approval. The lender must see the contract and financial documents.

As an alternative, try to negotiate a deal where monies you owe are put on the end of your loan. Restructuring the loan can help you keep your home and get on your feet.

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