Are you in a financial funk?  A melee of debts and reduced income?  Not quite sure what your options are?  It all depends on exactly what your situation is and who your creditors are.  Let’s say for instance you were making money.  And now you are not, and you don’t know how you will pay your mortgage.  Your home was worth $250,000 last year, but now it is worth $180,000, and you owe $230,000.

First contact the company you send your mortgage to.  Ask them if they are willing to do a short sale (take less than what is owed on the note).  If they agree to do a short sale, then hire a competent Realtor / Short Sale specialists, such as myself to sell your home.

If the bank does not agree to do a short sale then ask them about a loan modification.  They will only modify the loan if you can prove that you can make the payment.  If you are unemployed or self employed, it will be very difficult to obtain a loan modification.

If you are already behind on your mortgage and other payments, and you only own your primary home, then you may want to consider Chapter 13 bankruptcy.  This may allow you to restructure your current debt payments and retain your home.  I highly recommend you consult a bankruptcy attorney in this matter.  They can advise you properly and give you instant mental relief.

Worst case scenario is that you may have to give the home back to the bank (foreclosure).  If the bank is unwilling to work with you, then I would suggest you offer them a deed in lieu of foreclosure (DLF).  In a DLF, the bank may obtain a property sooner and may even give you some cash for the keys to the property.  Although this is still technically a foreclosure, it may have a lessor impact on your credit versus a foreclosure.

I am frequently asked how do these actions affect my credit or my ability to purchase property in the future.  I have heard from bankruptcy attorneys that a credit score can increase after bankruptcy has been filed.  The real damage to a credit score happens when you are late on your mortgage payment.  You must maintain a minimum of a 620 FICO score, and most lenders require a 660 FICO score to purchase a home.  With a late payment, your score will most likely be around 600.

Try to avoid a foreclosure if you can.  Help is out there; you just have to ask for it.


Raichart Out…….