Loan Modification This is a process whereby a homeowner's mortgage is modified and both lender & homeowner are bound by the new terms. The most common modifications are lowering the interest rate, reducing the principal balance, 'fixing' adjustable interest rates, forgiveness of payment defaults & Fees, or any combination of these.
Short Sale This is a process whereby a lender reduces the principal balance of a homeowner's mortgage in order to permit the homeowner to sell the home for the actual market value of the home. This specifically applies to homeowners that owe more on their mortgage than the property is worth. With out such a principal reduction the homeowner would not be able to sale the home.
Short Refinance This is a process whereby a lender reduces the principal balance of a homeowner's mortgage in order to permit the homeowner to refinance with a new lender. The reduction in principal is designed to meet the loan-to-value guidelines of the new lender (which makes refinancing possible). Deed in Lieu of Foreclosure This is a process whereby the lender releases the homeowner from the obligations of the mortgage in exchange for the Deed to the home.
Cash For Keys Negotiation This is a variation of the Deed in Lieu of Foreclosure. The difference is that the lender will actually pay the homeowner to vacate the home in a timely fashion with out destroying the property. The lender does this to avoid incurring the additional expenses involved in evicting such homeowners.
HOMEOWNER BENEFITS The most common benefit to the homeowner is the prevention of Foreclosure. This is accomplished because Loss Mitigation works to either relieve the homeowner of the mortgage obligation or it works to create a mortgage resolution that is financially sustainable for the homeowner. LENDER BENEFITS Lenders benefit by mitigating the losses they would incur through foreclosing on the homeowner. Immediate foreclosure creates a tremendous financial burden on the lender. Loss Mitigation allows the lender to take a lesser loss right now in order to avoid the much greater losses caused by such foreclosures.What is Loss Mitigation
Now you can get a loan modification help for your mortgage, now you can lower your monthly payments to what you can afford. With the increasing rise of foreclosures and distressed homeowners needing a solution, the real estate industry has been hit with many homes going back to the bank. For those who want to save their home, loss mitigation companies have come to the rescue. Offering to lower monthly payments and help homeowners with adjustable rate mortgages. A new crop of specialists and consultants have come on the scene to cash in on the commissions, referral fees and profits of negotiating a deal through loan modification efforts.Interested in starting a new career recession proof in this field?
Some sites offer certification, while others say that this is not a well regulated certification. One company that I have noticed that has a large training, certification and support system is Freedom Foreclosure Prevention Service. They have an affiliate site by which you can join up under another member and watch videos and see a webseminar.
How to get started as a Loss Mitigation Consultant
You will find this program among many being offered online, so here is a review of the system. The Tuition Fee for the Loss Mitigation Consultant Unlimited Access to the Online Support Center and Training, 8 Professional Websites and Fully Automated "Real Time" Case Tracking System, All Necessary Documents and Forms Lifetime Subscription to Premier Website Package -Loss Mitigation is the tool to get you in the front door of Real Estate Investing. Become trained as loss mitigation consultants and help homeowners save their home from foreclosure.
Fixed refinance is what many mitigation mortgage professionals offer persons about to loose there homes.
Many articles can be found about becoming a certified loss mitigation consultant, most of them charge a fee for the training materials, ebooks or videos. The official website is: http://www.freedomforeclosure.com/home
Loss Mitigation Short Sale
To qualify for a short sale you can contact the largest short sale negotiators at Chase bank or Wells Fargo. Short sale specialists can help you avoid foreclosure for a fee so you may want to check into how you can get free advice. The loss mitigation department at the bank helps distressed homeowners find the answers they need so as to not have to walk away from a foreclosure.
The loss mitigation process
To help negotiate mortgage terms between a lender and a homeowner who becomes behind on their mortgage payments due to financial hardship. There are different options available from deed in lieu of foreclosure, short sale negotiation, loan modification, short refinance negotiation, partial claim loan work out or cash for keys where the homeowner is given a cash settlement in exchange for vacating the foreclosure to help with moving expense.
To avoid foreclosure proceedings a deed in lieu of foreclosure where the homeowner turns over the deed to the home, so when the homeowner signs away the deed, the lender writes off the borrowers debt. The mortgagee will still be responsible for the loan if the buyer is unable to sell the home to cover the balance. In which case the loan would be listed on the homeowners credit as a default.
A mortgage short sale - allows for the property to be sold for less than what is owed on the home due to the homes value dropping below the outstanding loan balance. Once the home is sold the resulting sale price goes to the lender. The discounted loan balance may not pay all the remaining balance of the loan so the borrower would still be obligated to pay the deficiency.
Under water borrowers who owe more on their mortgage than the property is worth are having trouble selling the home at market value. Lenders may accept short sale offers this is done through their loss mitigation departments where they evaluate potential short sale transactions.
Approval of a short sale - can take months to close due to issues other than the primary lender such as in the case of the second mortgage lenders. If the homeowner has a second mortgage on the property by an additional lender after the primary mortgage holder receives payment from the foreclosure sale and the holder of the second mortgage can not claim any funds from the sale of the property until the first mortgage is settled. In most cases the second mortgage will carry a higher rate of interest.
If you decide to use a Chase Loss Mitigation specialist for a short sale by securing a Chase loan or line of credit. The bank will work with you and a real estate agent whereas the proceeds of the sale are insufficient to pay the balance in full.
To start the short sale process one will need to have a Realtor, so that they can list your property for sale on the multiple listing service. If you decide you want to keep your home and need alternatives to foreclosure you can see if you qualify for a loan modification.
In the case that you find that your home is not selling after being on the market for months, you may need to make a price adjustment, and your real estate agent can tell you what the fair market value is for your area. Chase provides a loss mitgation specialist who can help you with the best options if your home is not selling.
Once you do receive an offer on your home you will be required to fill out a short sale information packet and fax it with all the relevant information which will include a hardship affidavit as part of the loan modification request. The process could take 30 days or longer depending on the offers you receive on the home price or if there are junior liens by other banks or individuals who must approve the short sale amount.
A short sale may affect your credit rating, you may be required to pay taxes and it is important to know that a deficiency balance may still be owed even after a short sale is approved.
To get more detailed information regarding chase short sales read the frequently asked question page.
To be eligible for a short sale workout program you will need the loss mitigation department for Wells Fargo. Also you must owe more than what your house is worth. Some documents required include a signed financial worksheet of monthly expenses along with a hardship letter explaining why you are unable to pay the mortgage. In order for your Realtor to access the information on your account you must submit a letter giving permission with your social number, account number and property address.
According to Wells Fargo short sale guide to avoid the approval process from starting over one will need to close within 30 days for the short sale approval to be valid. A negotiator is assigned to the file so all communication must be done through them.
Real estate agents are allowed 5 to 6 percent commission on the sale and the transaction can not be sold to a personal friend or business associate. Commissions, fees and costs, pricing of the property and timeline will be discussed at the introduction call.
The Wells Fargo home mortgage likes to complete a property valuation, and borrowers financial evaluation prior to receiving an offer so it is recommended that the real estate agent representing the property contact them as soon as the home is listed for sale.
Timeline for events of the short sale application received and activated assigned to negotiator to review along with introduction call to realtor and homeowner, completion of property evaluation through appraisal or interior BPO, can be found in a PDF format:
If you want to buy a home from a home owner who is trying to avoid foreclosure by selling their home in a short sale, often times you will be getting the home at a reasonable discounted price. If you are the one selling a foreclosure you may find that to qualify you must prove a hardship to the bank and if approved the short sale process could affect your credit.
Tips for Buying Short Sales
Putting in an offer on a pre-foreclosure may sound like a great real estate opportunity, but there are a few things that you must consider first, such as the length of time it will take to close on the home as well as you will need to get the lender to accept your offer, which could end up leading to a bidding war if multiple offers are on the property.
It is suggested that in order to determine how much to offer on a short sale that you should do some research and contact your real estate agent to find out whether a foreclosure notice has been filed, who has the title, as well as how much is owed to the lender. Some times there is a first and second mortgage on the property so dealing with the second mortgage holder could be a problem.
The lender in the first mortgage would be the first to receive any money from the sale of the foreclosure with market values so low the second mortgage could end up with very little money to cover the back payments to the first lender. This could end up delaying the short sale process even further.
Tips for Selling Short Sales
Many who are in a position where they are no longer able to make mortgage payments may want to look into trying to sell their home. Sadly with market values so low, most homeowners owe more on the loan than the home is worth, causing them to be underwater. So what are the options? Could selling the home in a short sale be the answer?
Well first a homeowner must get approved by the lender to sale the home because the bank will be accepting an amount less than the amount owed on the property. Not all lenders will accept discounted payoff. In then there is the fact that not all borrowers or sellers qualify for short sales.
You will be required to submit a letter of authorization, so that your real estate agent or closing agent can talk to them about your loan, also a preliminary net sheet with the asking price you want to receive on the property along with unpaid loan balance, lastly the hardship letter is where you describe your financial situation and how you are unable to keep the home.
Having an experienced short sale listing agent will make it easier for you to sell your home, they will be able to list it on the MLS (multiple listing service) to find potential home buyers through open houses and home staging. You credit FICO score will be affected whether you do a short sale or a foreclosure. You will be able to buy another home within two years according to Fannie Mae guidelines.