Data from the Making Home Affordable Program for Wells Fargo has shown that homeowners who may have been unsuccessful at receiving a home loan foreclosure prevention plan could have alternatives to foreclosure through either a short sale or deed in lieu of foreclosure program. Wells Fargo is one of the main servicers who participates in various Making Home Affordable initiatives, and these foreclosure alternative options can be one route that homeowners take when their trial modification is either denied initially or is canceled due to financial difficulties.
According to the February 2011 MHA report, Wells Fargo had a total number of 4632 homeowners whose trial modification was canceled and were currently either in the process of or had been offered a short sale or deed in lieu of foreclosure plan. This total number has been tracked throughout the modification program and is hoped to give homeowners an idea of what disposition path they may face if they are unsuccessful at finding a permanent home loan modification plan. Yet, homeowners who were not initially accepted into a trial modification plan numbered at 10,954 for Wells Fargo in the short sale in deed in lieu of foreclosure plan options.
However, these numbers are still an overall decrease for Wells Fargo/Wachovia Mortgage, and there are some who feel that short sales and foreclosures are not much different in terms of a homeowner’s credit score and could cause a similar amount of damage. Yet, there are still those who could benefit from a short sale, but it will depend on the homeowner’s situation, since homeowners who are typically in the position to take advantage of a short sale are those who are in a distressed financial position due to unforeseen circumstances and will have had to explore options for foreclosure prevention first.
Understandably, homeowners who are in a bad position will need to begin exploring these options as soon as they can so that the loss of their home can be avoided and potentially they may be able to benefit from one of these multiple options. As an example, Wells Fargo reportedly participates in some state-specific programs from the Hardest Hit Fund that may help homeowners avoid foreclosure if a Making Home Affordable Program plan is unhelpful.
Short sales and deed in lieu foreclosure programs are an option for homeowners in a particularly troubling situation but those with major servicers are able to also seek out alternative foreclosure prevention plans and housing counselors can also offer guidance to troubled homeowners too. Seeking out a foreclosure alternative is something that homeowners may want to consider but addressing issues early, speaking with reputable housing counselors approved by HUD or the Making Home Affordable Program, and even contacting a homeowner’s state housing agency may all offer options to save a home and can be an alternative to plans that will allow a homeowner to exit without a formal foreclosure.