Refinance, Loan Modification or Short Sale?
Refinance, Loan Modification or Short Sale?
This is the biggest homeowner question when I attended a Foreclosure Help Clinic this last weekend. There’s no magic answer to this…it’s a case by case basis and really depends who the lender is or are when there’s more than one loan. Each lender is different.
Refinance – when you owe more than today’s fair market value of your property or if your income status has changed for the worst then refinancing may not be an option for you.
Loan Modification – when you want to keep your property because it makes more sense to stay than rent; when your income status has changed for the worst due to illness, job lost or decrease income, death, divorce… to name a few…then working with your lender on a loan modification is a very good idea. Each lender is different when it comes to loan modifications…the best thing to do is to check with your lender directly on what their requirements are. Make sure you check all your options & don’t despair. Don’t fall into a scam either…there’s plenty of companies who promises to do your loan modification for a fee but again there are FREE help out there too.
Short Sale – when refinance or loan modification is not possible then you may consider selling your property for less than what you owe, subject to your lender’s approval of course. Short sale is definitely better than letting your property foreclose. A professional Realtor could help in this case. Foreclosure is the worst option of all.
A consumer should consult with their lender, accountant and/or attorney for the possible ramifications of these options. It is very good to know an experienced Realtor who can give you an advice that is best for your interest.
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very valuable information, we sometimes put things in a little box and believe everyone is the same, and of course this is not true. Thank you for the explaination
Great post Roweena,
I also agree, every situation is case by case and has many variables. Seeking professional help is the best way to go.
Roweena,
Even your brief discussion of the different loan alternatives starts to make my head spin. It is clear that homeowners with loan problems need good professional advice to determine the best way to handle their particular situation.
Words from a Very Outspoken and Opinionated California Litigation Attorney (like there’s any other kind)
Here in California, our Department of Real Estate website (dub dub dub dot dre dot gov) lists the companies that have DRE “permission” to modify loans… add to this list any licensed California attorney, and that is where you should begin your due diligence search when you seek help in California. Other states probably have similar laws, so check with your own state DRE and state bar.
My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders who put them into an unaffordable loan and now fell into the hands of those same people who sold the toxic loans but profess to be saviors… DON’T BE A VICTIM TWICE! What’s that they say, “Fool me once, shame on you, but fool me twice, and I’ll sue your butt!”
Do your homework and THOROUGHLY investigate any firm before hiring them to save your biggest asset and the place you call “home.” Scammers are popping up like dandelions on a freshly mowed lawn in April. They advertise on the Internet, freeway billboards, radio, television, and print media everywhere, not to mention spamming your email box with those third-world widows needing someone to receive three million dollars for them. Make no mistake, in many cases, these “loan modification experts” are the exact same loan officers and mortgage brokers who fleeced homeowners the first time around. After losing their jobs with the crash of the mortgage industry, they have found a new way to make ill-gotten profits from hard-working homeowners through loan modifications.
In California, with very few exceptions (and attorneys are one exception… no coincidence there… attorneys make the laws), it is against the law for anyone to take money up front for helping a homeowner who is in default. Don’t trust a company that begins its relationship with you by breaking the law.
HERE’S THE BOTTOM LINE!
Hire an attorney – and not just any attorney either – one with experience in mortgage law, not just one with real estate law experience but one with experience in both FEDERAL and STATE litigation against mortgage companies, one who doesn’t also do family law, criminal law, admiralty law, and immigration law as well, one who limits the practice to mortgage law (or at least a great majority of it), one who has the experienced staff, training, and know how to take on the big lenders and their top notch lawyers (lenders have attorneys – and darn good ones – check out their counsel on the web – big names top schools, shouldn’t you have a lawyer too?).
We are not talking about a refund on your broken television here, we are talking about hundreds of thousands of dollars and your HOME – if you don’t think this is the time to hire a highly educated and experienced professional instead of a weekend schooled, almost out of work, broker slash loan officer slash “expensive water in a wine bottle with alleged magical curative powers” salesperson, I don’t know what would make you take things seriously.
Of course, this is one obnoxious lawyer’s totally biased opinion, but one based on many many distressing calls to my office every day. And, yes, my firm loves taking cases against loan modification companies who have violated laws. This field is quickly becoming one of the fastest growing sections for our mortgage law firm.
- Paul J. Molinaro, Esq.
Roweena,
Great explanation.
Larry
what about the old short refinance?
That seems to be a road not often taken, and it is going to be less damaging to your credit than a foreclosure and you road to equity is also shortened substantially.
A quick breakdown of how they work for those that don’t know:
http://www.bankapedia.com/mortgage-encyclopedia/residential-mortgage-terms/378-short-refinance