2008/12/Short Sale And Foreclosure Assistance

Contrary to what most people are saying I believe that the market will start to improve in the Chicagoland area in the spring and summer of 2009. This is not to say that we will go back to those great prices everyone was use to but interest rates will be down and houses will, I believe, start to sell. The average person owns a home for 3 years, so people that wanted to move any time in the last 2 Ā½ years will see this as an opportunity to do so.

If you own a home and are not looking to move there are a number of things that you can do besides let your home go into foreclosures. First, either you, or an attorney, can contact your lender and explain your situation. Most lenders are willing to work with you, either by lowering your interest rate or coming to an accommodation to accept a lower payment for a period of time.

Another alternative is to do a short sale. This is where the lender accepts less than what is owed on your mortgage. Say you bought a home for $300,000 and the house will not sell for more that $250,000, you then present a real estate contract to the lender and ask them to accept less. There are several catches with this. First you have to quit paying your mortgage. Yes an attorney is telling you to quit paying your mortgage. Hard as that is to believe you can not be current with your loan. Then you need to list your home with a real estate agent. Short sales are not quick and/or easy to do. You need to hire an attorney to help as besides the documentation that is required it is a very long process. I closed in November on property that went under contract is July. There are a large number of people that are trying to sell their homes prior to the foreclosure so the mortgage companies are overworked. Although since the federal government took over Fannie Mae and Freddie Mac the process seems to be moving a little faster. You MUST prove that you can not continue to pay the mortgage and that you have no other alternative. They also request documentation as to your finances, so they may ask you to contribute with money you have in a bank account.

Another alternative is to list the home and if it does not sell within 90-120 days you can ask the bank to do what is called a deed in lieu of foreclosure. That is where you prove that you can not pay the mortgage and attempts to sell the home have failed and, basically, since they will eventually foreclose on you any way you will just deed it back to the bank. This also requires documentation as to bank accounts and W-2s, income tax returns.

With any of the above I recommend that you use a professional to assist you in working through this maze. Each bank is different as to what documentation they want. In fact banks are even different from one location to another.

If I can be of any assistance to you please feel free to contact me.

Marianne Savaiano Fleisher
Real Estate Attorney