When Homeowners Become Seriously Delinquent

Homeowners Life JacketWhat happens when homeowners become seriously delinquent?

What happens when homeowners become seriously delinquent or cannot make their payments on loans from the bank for a property they are buying? The property is given back to the bank and it becomes a short sale. Although the bank will try to sell and collect for the entire amount owed on the remainder of the loan, often the property is sold for less and the homeowner who defaulted will become responsible for the balance not collected in the sale.

The law of some states only allow its financial institutions to hold a certain number of foreclosed properties. With short sales, the banks get a chance to liquidate their real estate inventory. It is very important to the bank to re-coop as much as they can on defaulted loans because it can effect how much the Federal Treasury supports their business.

Homeowner’s Life Jacket

Making a short sale can be somewhat of a life jacket for homeowners who are not able to get their mortgage refinanced or modified. Although, processes like this can take up to six months to process, the ending results may enable homeowners to settle with the bank without having to complete anymore payments on the loan.

Not every state in the United States allow for deficiency judgments, Florida law, however, does allow for the banks to pursue a deficiency judgment against homeowners for up to 20 years. In a case of multiple mortgages, this amount can be quite considerable and your credit score will continue to be affected by this until you pay off the debt. Even if homeowners do get the amount owed and judgments taken care of, it may still take a while for it to show on their credit report as anything but negative. Once a negative mark is on your credit, it is extremely difficult to clear up and can take a considerable amount of time to have it fixed and until it is, your chances of getting any type of loan with a low interest rate is slim.

Avoid a Judgement Against You

Homeowners Foreclosure AlternativesIt would be worth all the trouble of paperwork and time it will take to negotiate with the financial institution you borrowed from to avoid a deficiency judgment. Most banks will negotiate and accept the amount of sale on the short sale for the property as full payment, leaving homeowners free of the difference owed. That means homeowners will no longer owe a debt and there will not be a judgment held against them.

A lender will handle all negotiations, settlements and short sales according to its own corporate policy. However, a homeowner can show financial documents for proving financial hardship. If the lender is accepting to negotiate the financial loss on a property loan, they want evidence that you don’t have any other assets they could use to satisfying the debt.

 

Help for Seriously Delinquent Homeowners

Homeowners RealtyFox TeamAt the first sign of trouble, be sure to get help from a professional. At RealtyFox, we have a foreclosure and short sale expert, as well as a real estate attorney on staff to help you. Having our team beside you will save you and your lender a great deal of time and trouble. The government backed program called the Home Affordable Modification Program was extended to December of 2015. It is a modification program for homeowners that need debt relief because they have fallen behind on their mortgage payments.

Enlisting the help of our RealtyFox team and this program may be a way to salvage your credit and keep your home. In a worst case scenario, if you are able to eliminate your financial issues through a short sale and the lender agrees to keep it off your credit rating, you may qualify for another mortgage loan within 2 years.