· This is where we renegotiate our client's existing contract with the lender. A loan modification is effective when the initial teaser rate has expired, and the new interest rate explodes to ten percent or more. The lender may be willing to extend the teaser rate for a few more years, keeping our client in the home while the lender collects a monthly payment. Smart lenders see this arrangement as better than collecting nothing from a vacant house.
Short Sale
A short sale is for homeowners that are upside-down and can no longer afford to keep their homes. It is designed to get the homeowner out of the home, and help them avoid getting stuck with the bill for the remaining balance.
· A short sale is where a house is sold for less than what the lender is owed, and the lender agrees to release the property as security interest for that debt. While there is damage to the seller's credit scores, the damage is less than would result from a foreclosure.
· We can help prepare the offer, present comparative value reports to the lender, and negotiate the short sale contract. We also address less obvious but very important issues such as whether the seller is still responsible for the balance, and whether the seller has waived any rights to bring suit against the lender. Deed in Lieu This phrase (short for Deed in Lieu of Foreclosure) refers to the situation where the borrower places the keys on the kitchen table and walks out the door (or in the days of the drive through teller, hands the keys to the teller at the lending institution and drives away). · When the value of the home is about equal to what is owed, a lender may agree to accept the deed in lieu of foreclosing. This saves the lender the cost of foreclosing and evicting the borrower. However, the lender must still pay to maintain the property during marketing and sale, and pay a commission to a real estate broker to sell the property. Thus, if the equity in the property has not dropped too far below the amount owed, a lender may accept a deed in lieu. That said, the current mortgage crisis has not left many homes with enough equity to make a deed in lieu attractive to lenders. Lenders see no advantage in allowing a borrower to just walk away. In the climate of mortgage meltdowns, lenders are not usually willing to accept a deed in lieu. · The damage to the borrower's credit scores is about the same as that from a short sale.