Phoenix Real Estate-Short Sale and REO resources
May 30th, 2008 categories: Real Estate News
If you are like many homeowners in the Phoenix Real Estate Market and are facing diffucult times, here are some tips and resources that may be helpful.
- If you are behind on you mortgage payments -Contact the Lender Don’t ignore the lender, ask for the loss mitigation department.
- If you do not want to speak to the lender your self- Contact a HUD Approved Housing Counseling Agency:
- To find HUD Approved Housing Counseling Agencies, go to www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=AZ or call (800) 569-4287 or TDD (800) 877-8339
These agencies include:
AZ LawHelp: www.azlawhelp.org/viewresults.cfm?mc=3&sc=20
NID-Housing Counseling Agency: www.nidonline.org/
The HUD-approved National Regional Housing Counseling Intermediaries also provides counseling resources: www.hud.gov/offices/hsg/sfh/hcc/nrhci.cfm
Information the Lender or Counselor Will Need:
- Loan Information
- Monthly income documentation (pay stubs, tax returns
- Monthly expense documentation (utilities, child care, car payments, etc.)
- Detailed account of any circumstances that have lead to an adverse financial setback
The lender may also require the homeowner to complete and return a loan workout package/hardship package which contains information, forms, and instructions, before the lender will discuss the options.
Possible Loan Workout Options
- Reinstatement: Paying the total amount owed in a lump sum by a specific date in exchange for forbearance.
- Forbearance: An agreement to reduce or suspend payments for a short period of time.
- Repayment Plan: An agreement to resume making monthly payments with a portion of the past due payments each month until they are caught up.
- Loan Modification: An agreement to change the terms of the original loan to make the payments more affordable. For example, missed payments can be added to the existing loan balance, the interest rate may be modified or the loan term extended.
- Claim Advance/ Partial Claim: If the loan is insured, the homeowner may qualify for an interest-free loan from the mortgage guarantor to bring the account current. If so, the homeowner will be required to sign a promissory note and a lien will be recorded against the home until the loan is paid in full.
Options to Avoid Foreclosure
If a loan workout or refinance is not an option, the homeowner’s best course may be to sell the home to avoid foreclosure. The lender may agree to a sale on the following terms:
- Work out sale: An agreement not to foreclose for a specific amount of time to allow the home to be sold and the loan to be paid off
- Short Sale: In a situation where there is more debt owing against a property than the property’s value, the lender may agree to allow the property to be sold for less than the loan amount and/or accept less than (or “short”) the amount owed as payment in full. There are tax implications and other issues to consider before entering into a short sale agreement. For more information, see NAR’s Field Guide to Short Sales,
- Assumption: The lender may allow a buyer to assume the loan and purchase the property even if the loan is non-assumable.
Deed-in-lieu of Foreclosure
The lender may allow a homeowner to “give back” the property. This option may not be available if there are other liens recorded against the property. For more information, go to:
HUD FAQs:
HUD Requirements: www.hud.gov/offices/hsg/sfh/nsc/rep/dilfact.pdf
