How to Get Mortgage Relief in Times of Harship: Save your credit and future with a short sale

How to get mortgage relief in times of hardship: Save Your Credit and Future with a Short Sale…

How to get mortgage relief in times of hardship

Times are tough right now, especially for anyone that’s not a part of the 1%. While Wall Street and large companies have record profits, many homeowners are struggling to pay their mortgages and save their credit score in the process. While there have been mortgage relief programs put in place by the government, many people are still struggling to find relief from their mortgage payments and are suffering consequences to their credit that may affect their ability to purchase a home in the future. 

In this article, you’ll learn everything you need to know about how to get relief from your mortgage payments and what you can do to save your credit if you’re in Pre-foreclosure or if your house is being foreclosed on. You’ll also learn about forbearance, debt negotiation and the process of getting out from under your distressed mortgage in ways that allow you the ability to purchase your home in the future with less hoops and more options. If all of this is too complicated for you, please do yourself a favor and contact us today for help with your pre-foreclosed or foreclosed home so we can help you with a short sale. 

Understanding Mortgage Relief and The Current Housing Market:

Getting relief from your mortgage can happen a number of different ways and they’re all a little bit different…

Here are the many ways to get mortgage relief: 

  1. Forbearance
  2. A Short Sale(the most recommended)
  3. Foreclosure
  4. Refinance your home(depending on the loan to value ratio, your credit score and other factors)
  5. Deed-in-lieu of foreclosure

Additionally given the impact of COVID on the housing market FHFA has a list of resources for distressed homeowners looking for mortgage relief. Many of these seem appealing but aren’t as beneficial as they sound… Forbearance is an option that FHFA and the CARES act has given any distressed homeowner during this crisis, so that is where we’ll start in the process of mortgage relief.

1. Forbearance for Mortgage Relief:

Forbearance is a form of mortgage relief that many homeowners have already taken if they’re struggling to pay their mortgage. While many have been laid off or furloughed, their mortgages still need to be paid, and if you’re reading this it likely means that you are needing help with mortgage relief. If you’ve called your lender and requested assistance they likely gave you the option of forbearance. Most lenders are able, or required to assist homeowners through a form of mortgage relief known as forbearance, but what is it? 

What is Forbearance?

Forbearance, in simple terms, is the postponement of mortgage payments for a set amount of time. Meaning if you can prove to your lender that you are under financial stress, you can stop paying your mortgage for a set amount of time. While this is appealing, most homeowners who go into forbearance end up going into foreclosure because they aren’t able to save up for the lump sum payment due once forbearance comes to an end. 

Yes, you read that right… Once forbearance comes to an end, generally, the sum of the missed payments is due. Meaning all of the money, the principal and interest, that you haven’t paid while in forbearance is often due after forbearance is up. So while it can give you temporary relief, it doesn’t often end up allowing you to get the relief you need because the payments are still due in their entirety. Currently the CARES act is offering a type of forbearance that doesn’t allow lenders to require a lump sum payment once forbearance is up. 

In most cases pre-COVID-19 or unrelated to COVID-19 forbearance does not extend the timeline of your loan and it does not allow you to truly “skip” any payments. It only serves as a temporary dampening to the distressed homeowner.

If you’re in forbearance and feeling scared about the upcoming lump-sum payment, please contact us immediately for help in starting the process of a short sale. If you are in forbearance under the protection of the CARES act and feeling like you’re going to be unable to resume payments once forbearance is up, please contact us immediately. We at mortgage-relief.com are experts at helping distressed homeowners find confidence and options to get mortgage relief, specifically through short sales. Later in this article, we’ll talk about what a short sale is and exactly how to start the process.

Things you’ll want to have before you contact your lender about Forbearance:
  • The reasoning for why you’re unable to pay your mortgage payment
  • An understanding of whether this problem is temporary or permanent and why it may be temporary or permanent
  • Detailed information about your assets, current income, other liabilities and anything else that details your current circumstances and financial situation

The easiest way to find your lender’s contact information is to look at your latest mortgage statement. It’s not always going to be the company who helped underwrite your mortgage. Most often, once your mortgage is underwritten, it is packaged and sold with other mortgages to larger mortgage companies. So it’s not always going to be the company whom you worked with initially who still owns the note on the mortgage. 

It may not even be the company who services your mortgage, who owns the mortgage. The servicer is required, to the best of their knowledge, to tell you who owns the mortgage and provide their contact information. 

When you call your mortgage company, ask them who owns your mortgage… or use one of these tools to see if your mortgage is owned by Freddie Mac or Fannie Mae. Fannie Mae and Freddie Mac are the backers for a majority of the mortgages in the US. You may have another backer besides Freddie Mac and Fannie Mae but these are the two most common mortgage backers. To find out who backs your mortgage check these tools or ask your mortgage servicer who backs your mortgage if you can’t find it here.

Now is probably the best time for us to explain the difference between a mortgage servicer, a mortgage backer and a mortgage lender.

A mortgage servicer is the company that sends you your mortgage statements, collects the money and tackles the day-to-day tasks of managing your mortgage. It’s the company that you see on any mortgage bills, statements, or e-portals.

A mortgage lender is the company that lent you the money to purchase your home. This company can then turn around and package/sell the packages of mortgages which are called mortgage backed securities.

A mortgage backer, like Freddie Mac or Fannie Mae, is a company that will purchase the mortgages from banks in order to re-establish liquidity into the banks and allow them to lend more money to new potential homeowners. Mortgage backers vary in size and ownership. Entities like Fannie Mae and Freddie Mac also give an opportunity to investors to make a return on packaged mortgages called mortgage-backed securities. For the purpose of this article it doesn’t make sense to go into further detail about mortgage backers, lenders or servicers. The point is to understand who your mortgage servicer/lender are and who the mortgage backer is in order to understand your options for mortgage relief. 

2. A Short Sale for Mortgage Relief: 

This is our bread and butter here at mortgage relief. We are short sale and debt negotiation specialists that help distressed homeowners walk away from their mortgage and home without the damage of foreclosure to their credit, ego, or ability to maintain housing in a time of crisis.

What is a short sale?

A short sale(also known as a “short payoff”) is when your lender agrees for you, a distressed homeowner, to sell your house for less than the amount due on the mortgage. Oftentimes, a foreclosure is much more work for a lender than a short sale, because of this the lender/bank will often agree to minimize or sometimes completely eliminate closing costs for the homeowner.

There are many benefits to executing a short sale instead of letting your home become foreclosed upon including;
  • A short sale generally allows the homeowner to maintain better standing with credit reporting agencies/bureaus.
  •  A property involved in a short sale is generally sold “as is” so the homeowner isn’t required to make the same repairs that they normally would in a “normal” real estate transaction

While this is our bread and butter, we want homeowners to know that it’s a complicated process and that’s why we’ve chosen to become experts at short sales vs. other types of Real Estate. We know the RE market and we’ve represented buyers and sellers in nearly every county in Oklahoma. Because of that, we know the real estate market like the back of our hand, which gives us invaluable experience. 

On top of that, we know how to negotiate with banks, list houses for the right price and help homeowners who are distressed get mortgage relief. 

3 Things You Must Know About Short Sales:

Short sales are a great option for a distressed or insolvent homeowner to be able to get out from under their mortgage and suffer the least during the process. They are a long and complicated process that require a specialist for many reasons. It’s in the bank’s best interest to recover as much money as it possibly can from the sale of the house, whether this be foreclosure, a short sale, or a deed-in-lieu of foreclosure. Because of this, you should know these things about short sales to help increase your likelihood of getting approved for a short sale:

1. Missed payments or Home Equity Loans impact the likelihood that a bank will allow a short sale

Missed mortgage payments and 2nd or 3rd mortgages will have an effect on the bank’s willingness to allow a short sale. This doesn’t mean a bank won’t approve a short sale if you’ve missed payments, in fact most of our clients are homeowners in pre-foreclosure, but the sooner our clients seek help from their lenders, like asking for forbearance and disclosing financial stress, the better off they generally fair in the short sale approval process. Equally so, the sooner our clients reach out to us, the better chances we have to be able to negotiate with the bank and create a situation where everyone wins.

2. Just because a bank approves a short sale doesn’t mean that all your worries are overbut we guarantee that we’ll get you an offer within the first day of approval for your short sale

Once you get approved for a short sale, the real work starts, at least for us. This is where we really get started marketing your property and helping you with the process of truly selling your house. The special thing about our company is that immediately after getting approval, we’re able to get an offer from a team of investors that’s willing to buy nearly any property in Oklahoma or Ohio. Just because the bank has approved your short sale, doesn’t mean that they’re willing to accept any offer, but we’re ready to submit one as soon as your approved and generally, the house is able to go under contract as soon as the very next day after being approved.

The bank accepts a short sale when they feel it will help them avoid the work of foreclosure, but also when they believe it’s in their best interest. A bank’s interest is to maximize profit, just like any other business. Because of this, we are to present your property to our team of investors and find you solid offers that are in line with your given market immediately. 

We are pros at this and love to help clients like you get the most out of the short sale of your house in order to help the banks accept the offer and minimize the damage to your credit and emotional health.

3. The more diligent you are about admitting that you need help and adamant about seeking it, the more likely you will be to get approved

Short sales are a complicated process and it’s important to be diligent about the entire process of requesting help. As we stated earlier, it’s in the bank’s best interest to get the most amount of money from lending money for your property. They decided to lend to you because they saw a capital interest in financing your home. You aren’t just paying them the money you borrowed, you are paying them interest… and while 5% doesn’t seem like much, over time it can be over twice the original amount of money they lent to you. Because of this, it’s in their best interest to get paid monthly… If that’s not happening, their next option is to try to recover as much money as they possibly can from the sale of the house, whether that be through foreclosure or a short sale.

It generally costs a bank more money the longer a homeowner waits to seek help. The longer  that a homeowner is insolvent the more money it costs the bank because of the time it takes to enter foreclosure or to execute a short sale. Either way the bank is waiting on it’s money for longer than it planned for on it’s books. Because of this, even if you are a distressed homeowner, they will generally be more willing to help a proactive homeowner. 

If you are in fear that you might not be able to pay your mortgage soon or already in default, please contact us for help. We encourage you to do so as quickly as possible so we can begin the process of investigating whether you’re a good candidate for a short sale. 

3. Foreclosure for Mortgage relief:

This is the last and final resort for mortgage relief and is the most impactful form of “mortgage relief” on your credit, family and personal stress levels. We STRONGLY recommend against foreclosure if you can help it. In essence, the only reason why foreclosure is a form of mortgage relief is because it’s when you ultimately cannot pay your mortgage anymore and stop making payments. Typically foreclosure starts when you stop paying your mortgage for a few months. 

**Each state works differently when it comes to foreclosure. We at Mortgage Relief work only in Oklahoma and Ohio right now, but plan on opening up our services nationwide when we can. 

What is Foreclosure?

Simply put, foreclosure is the repossession of a property when a homeowner fails to make payments on their mortgage. This happens in stages, pre-foreclosure being the first step in the process. The homeowner will be notified that the bank is starting the foreclosure process and are giving public notice about the insolvency of the homeowner and their plans to foreclose on the property. 

There are two types of foreclosure:
  • Judicial Foreclosure which is done by filing a lawsuit against the homeowner and can lead to foreclosure as well as other consequences that we’ll talk about in a second.
  • Non-judicial Foreclosure in which the lender can foreclose on the homeowner without taking them to court, this still carries many consequences, sometimes exactly the same as judicial foreclosure. 

Foreclosure will affect your credit score and ability to buy a house for up to 7 years. It’s extremely damaging to your credit score/report and can have a negative impact on other parts of your life including your ability to be hired for certain jobs, the types of security clearances that might apply to you, and others…

We won’t spend any more time on foreclosure… the most you need to know is that you should avoid it at all costs. That’s why we’re here, if you think you’re on your way towards foreclosure or if you’ve received legal notices from your lender, contact us immediately. 

4. Refinancing Your Home for Mortgage Relief:

If you have good credit and a good loan to value ratio, refinancing may be an option that you should consider, although for many that are struggling to pay their mortgage, it might be hard to prove income and in turn qualify for refinancing their home. 

If you think you might qualify for refinancing your home, contact your lender before you miss any payments! Missed payments will affect your credit score and severely affect your ability to refinance. 

Refinancing your home might be a viable option to find mortgage relief. Call your lender immediately and request every available option for mortgage relief including asking about the possibility of refinancing your home in order to pull money out to help with your payments while you look for new employment or reorganize your financial situation to be able to pay your mortgage in a timely manner. 

5.  A Deed-in-lieu of foreclosure for mortgage relief:

Similar to a short sale, the bank may accept the repossession of your house without undergoing the foreclosure process. This can help save you the painful process of foreclosure but may not be your best option. A deed-in-lieu of foreclosure carries its own set of consequences to your credit score and ability to purchase a house in the future. 

A deed-in-lieu of foreclosure is when the bank decides to accept the property in lieu of pursuing foreclosure of the property. In essence it’s a foreclosure without the formal proceedings or processes that are involved with a foreclosure. 

Again, this is a last resort and we recommend that you pursue other options before attempting to execute a deed-in-lieu of foreclosure on your property with your lender. 

In conclusion: 

There are many types of mortgage relief and none are fun. We never set out to buy a house without the ability to pay the mortgage. For many homeowners the intention when you bought your house was to create a home out of it, not to get into financial trouble with it. The last thing we want is to deal with foreclosure or financial difficulties, but it can happen to everyone… And that’s why we exist, to help distressed homeowners navigate their way out of mortgage insolvency through short sales. It’s the best option for many homeowners and their families. It allows many homeowners to purchase another home sooner and has less of an impact on their credit scores, their emotional well-being and their pride. 

If you are struggling to find relief from your mortgage and concerned about your ability to make payments, are already late on payments or have been filed on by your lender, please do yourself a favor and allow us to see if you qualify for a short sale. 

Contact us today and we’ll be happy to assist you in getting the mortgage relief you need!

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