Homeowners with Wells Fargo have sought out short sale plans and deed in lieu of foreclosure opportunities over the past months, and these programs are still available in May of 2011 for those who are struggling to meet their mortgage requirements but fear that foreclosure may be inevitable. Recent data that was released earlier this month has shown that certain aspects of Wells Fargo’s short sale and deed in lieu of foreclosure initiatives have seen some success, but there are issues that have been surfacing over the past weeks that homeowners may need to consider before opting for these forms of foreclosure alternatives.
Treasury Department data has shown that, for homeowners who were not accepted for a trial modification within HAMP saw an increase from reports that have tracked progress for earlier in the year. The March HAMP report stated that Wells Fargo/Wachovia Mortgage had a total of 11,613 homeowners who either were in the process of or had completed one of these foreclosure alternative plans, and many individuals feel that these opportunities to avoid a formal foreclosure are more beneficial and are seeking to take advantage of them still today.
However, there have been some indications that short sales, as one example, still hurt a homeowner’s credit score to an extent that is comparable to a foreclosure, and this has many questioning why homeowners are even pursuing these forms of alternatives. In some cases, homeowners may fare just as poorly if they participate in a short sale than if they had let their home fall into foreclosure, but there are some who argue that benefits for Wells Fargo homeowners, among those who are also working with other financial institutions, still exist if one of these foreclosure alternative plans will be pursued.
As an example, homeowners who take a hit to their credit score as a result of foreclosure or walking away from their home will obviously be viewed in a negative light by certain lenders in the future, but if a homeowner has participated in one of these programs it would show they have qualified for assistance due to financial distress that was no cause of their own, it could be viewed more favorably. Simply put, homeowners who are facing unemployment or cutbacks in their wages, but have not simply acquired mortgage debt beyond their means to repay, are those who will likely qualify for a short sale or deed in lieu of foreclosure program and despite the fact that a homeowner’s credit score could be reduced, it may offer these homeowners the opportunity to reenter the housing market sooner as, again, a lender will see that the loss of their home was not because of poor financial practices.
However, homeowners with Wells Fargo or any financial institution needs to make efforts so they will not have to come to this point where a foreclosure alternative is necessary, but rather explore modification options and state-specific aid soon after these financial problems arise in the hopes that the foreclosure can be prevented entirely and homeowners will be able to remain in their home.