Foreclosure is not the best way out. Walking away from your home is not the best way out. Those options may only make life worse for you. A short sale may be your best option.
· Banks have up to 15 years to come after you for a deficiency judgement (per the State of Michigan Law which is a recourse state), if you walk away from your home or allow a foreclosure to occur and the lender underbids the amount owed (example you owe $100,000 the bank bids $50,000 at the foreclosure sale, which means the bank can chase you for 15 years for the $50,000 and expenses when they sell the property).
· Banks may just sell your deficiency judgment to a collection agency and they can hound you for all of those 15 years. This is the most common result now days.
· It will be 5-7 years after a foreclosure before you can qualify for a new mortgage vs. an average of 0-2 years with a short sale (the FHA has proposed allowing short sellers who were not delinquent to purchase again the day after the short sale, there was a hardship that caused the sale).
Let’s get this straight, too - you will NOT have your current house at the end of the short sale process. This is not some magic way to save your house. This is a way to get you out of this mess with the least amount of damage to your credit and the best chance of getting a new home in the least amount of time.
What about a loan modification?
The lenders have seen a high rate of eventual delinquencies and foreclosures on loans that they have modified. Understand that if you are approved for a loan modification it will only be a temporary trail loan modification, usually 3-12 months. If you can make it through the trail modification, which 90% DO NOT, then they will look at you for a permanent Loan Modification. The banks that took Federal TARP money are obligated to at least offer this option, but they are not enthusiastic about the program and most would prefer a short sale. Many lenders will not even offer loan modification as an option; however, you should ask your lender if they have a Home Affordable Modification Program (HAMP) that might work for you. SEE: www.miforeclosurehelp.com/
Why not do a deed in lieu?
The deed in lieu option, in which you hand the property deed over to the bank as payment for your mortgage obligation, has fallen out of favor with banks that prefer that you make the effort to sell the place, rather than having to do those themselves. Many banks have stopped accepting deed in lieu proposals. A deed in lieu of foreclosure will have the same effect as a full blown on your credit report. SEE http://www.miforeclosurehelp.com/
What about declaring bankruptcy?
While bankruptcy may indeed protect you from collection efforts by the bank, it is also the most damaging to your credit history and takes the longest to recover from usually 7-10 years before it is removed from your credit report.
Worried that you could end with a deficiency judgment? www.miforeclosurehelp.com/
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Thanks for reading, Rick Giese.
Rick Giese is a real estate associate broker at RE/MAX Advisors.
Phone Toll Free: 1-800-274-5656. email: Rick@RickGiese.com
Rick Giese specializes in loan modification assistance and short sales in the Macomb , Oakland and southern St Clair County Areas of Michigan. Macomb Loan Modification Help, Macomb Short Sale Help. Oakland Short Sale Help Macomb and Oakland County MI our services are offering sellers another option besides pre-foreclosure foreclosure or bankruptcy that can affect their credit for years. We are currently offering our services in the Richmond, Shelby Township, Macomb Township, Chesterfield Township, New Baltimore, Clinton Township, Sterling Heights, Mount Clemens (Mt Clemens) Fraser, Harrison Township, Warren, Roseville, St Clair Shores areas of Macomb County Michigan Madison Heights, Troy, Clawson, Royal Oak, Rochester, Rochester Hills, Berkley, Birmingham areas of Oakland County
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