Short sale programs for homeowners with an underwater mortgage are available through some federal home loan assistance initiatives and even some state assistance plans, but homeowners who are seeking foreclosure alternatives from short sales have had both benefits and difficulties which have been faced. Yet, understanding short sale programs may be helpful when it comes to homeowners who feel that selling their home through an approved short sale initiative may be their only option to avoid foreclosure.
While many of the nation’s top mortgage servicers like Bank of America, Chase, Citigroup, and Wells Fargo/Wachovia, among others, do offer these foreclosure alternative plans from the Making Home Affordable Program, there are, again, some states which may offer short sale opportunities to homeowners, but this again will have to be approved by a homeowner’s servicer. Yet, in situations where severe negative equity is present, homeowners who are behind on their mortgage or are simply facing trouble have often turned to these opportunities to escape their mortgage before they face foreclosure as a result.
Homeowners who are considering a short sale have typically been required to consider a foreclosure prevention program, like a home loan modification, but homeowners who either do not qualify for the Making Home Affordable Program, are unable to complete a successful trial period, or become delinquent despite having an assistance option in place may then qualify for a short sale in order to avoid foreclosure. Typically, homeowners might show that they are facing financial hardship and cannot meet their mortgage payment, despite having a history where they were previously able to afford their home loan costs.
Obviously, there have been some homeowners who were struggling with an underwater mortgage, unemployment, or a combination of both who have been able to short sell their home and avoid foreclosure. However, homeowners need to understand that these programs have not been a guarantee as a buyer must be found for the property before a short sale can take place. In some cases, a servicer has approved a homeowner to begin the process of selling their property for less than the full amount due on the mortgage, and if this is successful this short sale will be seen as the full satisfaction of the mortgage debt.
Yet, homeowners who may be current on their underwater home loan or who may simply be having a difficult time making payments have seen less success in these areas due to the fact that, again, homeowners facing financial hardships and run the risk of defaulting since they cannot qualify for a foreclosure prevention program are usually those who may be able to qualify for a short sale. However, homeowners must find a willing buyer and get approval from their servicer before a short sale will be approved, and it is in this area that some homeowners have found difficultly. Yet, homeowners are more still being prompted to speak with their servicer about either a short sale or perhaps a deed in lieu of foreclosure plan so that an official foreclosure will not take place on their home.