Homeowners who are unfortunate enough to be underwater on their mortgage and looking to move or sell their home often seek to work with their mortgage lender to get out of the home or at least make the payments more manageable to allow a transition. Whether through a loan modification or a short sale, a homeowner has to get their mortgage lender’s approval before taking any steps with regards to selling the property.
A short sale or a pre-foreclosure sale is a sale of the home for an amount that is less than the homeowner owes, which means that the mortgage lender is not fully paid back. While this option may help a struggling homeowner leave a bad mortgage behind, short sales can only happen with the mortgage lender’s approval, and the mortgage lender is rarely obligated to work with a homeowner to authorize a short sale. Not all lenders are motivated to work with the borrower, and borrowers who have a buyer ready may lose out on the sale due to delays by the mortgage lender.
There are programs available to homeowners who are facing foreclosure, and one such program, the Home Affordable Foreclosure Alternatives (HAFA), works with homeowners and lenders to get both parties through a short sale faster. The program is optional for lenders, but homeowners whose lenders participate in the program can apply to ensure they have a preapproval of their short sale in a shorter amount of time so they do not lose potential buyers.
Part of the eligibility requirements is that the property must either be the borrower’s primary residence or a rental property. The program assists homeowners and their tenants if the property is used as a rental property with up to $10,000 in relocation expenses to help move the short sale process along. A borrower who wishes to participate in the HAFA program is first evaluated for eligibility under the Home Affordable Modification Program (HAMP). Therefore, even if the homeowner is not eligible for a short sale, they could get assistance with a modification of the loan, allowing them to stay in the home. This may be an option for a homeowner who can still afford to make a payment on their mortgage if it was reduced, and still wants to keep their home.
If a short sale approved through the HAFA program does not go through, the borrower is still in a good position because they can still get out of the mortgage by giving the deed to the property back to the lender in a deed-in-lieu of foreclosure under the program. There would also be no deficiency after settling with the mortgage lender through the HAFA program; therefore the homeowner can walk away without fear of the lender later coming after them for the difference owed between the mortgage owed and the sale price.
Contact A North Miami Foreclosure Defense Attorney
If you are facing foreclosure, it is important to seek an experienced foreclosure defense attorney to protect your interests. Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case.