Prevent Foreclosure: An Overview of Short Sales and Loan Modifications

Prevent foreclosure is currently a hot topic. Millions of borrowers are struggling to make their mortgage payment. With rapidly declining housing prices, many owe more than their property is worth. The credit crisis has left debtors unable refinance their loan; leaving homeowners with few options to save their home.

It is important to do everything possible to prevent foreclosure. First and foremost, foreclosure exposes people to the very real possibility of homelessness. No one wants to live in a shelter, their car, or on the streets. Programs exist to help people in financial crisis.

If you are facing foreclosure and fearful you will end up being homeless, now is the time to seek out assistance programs in your area. These programs take time to implement and can take weeks to receive financial aid.

Those fortunate enough to have some money stashed away should contact their lender and inquire about obtaining a loan modification. When borrowers become delinquent with their payment by 31 days, banks often turn their account over to their loss mitigation department.

This department is comprised of loss mitigators whose primary function is to help distressed homeowners prevent foreclosure. The first option is usually a loan modification. When a mortgage loan is modified the terms are permanently altered. If the borrower is unable to adhere to the modification, the lender can commence with foreclosure action.

Each mortgage lender handles delinquent accounts according to their established protocol. Some lenders require borrowers to cure mortgage arrearages prior to modifying the loan. Others require a partial payment toward delinquent amounts. A few lenders will roll the delinquent amount to the end of the mortgage note and extend repayment terms.

When borrowers do not qualify for a loan modification, banks will sometimes allow them to enter into a short sale agreement. With short sales, lenders accept less than is owed on the home loan in exchange for quickly selling the property.

Short selling a home will prevent foreclosure as long as the borrower is able to locate a qualified buyer. Most short sale homes must be sold through a realtor. When possible, it is best to work with realtors who possess experience with the short sale process.

Obtaining short sale approval is a long and complicated process. Borrowers are required to submit substantial documentation proving financial distress. Lenders incur a loss on properties sold through short sales and borrowers must prove they do not posses any assets which could be used to repay the mortgage note.

Obtaining short sale approval is a long and complicated process. Homeowners must provide substantial documentation to prove financial distress. Since lenders incur a loss on short sale properties, borrowers must prove financial distress in order to obtain approval.

One little known secret to selling short sale homes quickly is to locate private real estate investors. Many investors seek out preforeclosure homes because they can be purchased below market value and are generally good investments.

It is a smart idea to work with investors who specialize in short sales. At present, banks accept about one of every ten short sale requests. Borrowers can improve their chance of success by working with experienced professionals who understand the intricacies of the short sale process.

Although your situation may seem hopeless, there is always a solution to every problem. If you need help obtaining short sale approval contact your lender or locate a short sale specialist today. Procrastinating will only make matters worse and eventually lead to foreclosure.