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Arizona Loan Modification Help
Until just this last March (2009), if you couldn’t afford your Arizona home, you had little choice but to allow the lender to foreclose, or try to do a short sale. In other words, you were moving; there were no options in any state to stay in your home. Now, in an effort to stop foreclosures and stabilize the economy, the federal government has created some programs to enable you to stay in your home and avoid foreclosure by modifying the terms of your current mortgage. This is a "loan mod."
There are currently four federal programs to make mortgage modifications available to the public: HARP (Home Affordable Refinance Program), HAMP (Home Affordable Modification Program) HOPE for Homeowners, and the FDIC’s Mortgage Modification Program for IndyMac. Of these four programs, only HAMP has made any real progress in modifying mortgages. The other programs do not have broad lender participation, and the guidelines are too strict for many borrowers.
Unfortunately, one of the hottest topics in today’s Arizona real estate market is the subject of short-sales, foreclosures, and lender owned properties (REO). Now, I’m going to begin a whole series here on short-sales, but you’ll get the answers to your questions on the other subjects as a matter of course. There is a LOT of information to cover, but cover it we will, and in as logical a manner as possible. Here are a list of questions that we will answer, and when they are all done, I’ll post it in the archives:
1.) What is a short-sale?
2.) Who is eligible to do a short-sale?
3.) How do I prepare myself, my home, and my finances for a short-sale?
4.) What is the process of doing a short-sale in Arizona?
5.) What are the consequences of doing a short-sale on my home?
You need to prepare yourself in two ways, really, for a short sale. You need to prepare yourself mentally & emotionally, and also financially. Both aspects are critical. Like any challenge, you cannot simply go around it. You must go through it. Trying to avoid problems in life will lead you to a comfortable beach. Only, you won’t be lounging with a Mojito. You’ll be looking for a place to bury your head. First, let’s check your head. . .
To do a short “sale” the home has to be up for sale first. If you’ve already determined that you are a great candidate for a short sale, you next have to find an agent who will put your home on the market. Just like any time you put your home on the market, choose the best agent you can find. Choosing the wrong agent to do a short sale can cost you dearly. This agent should also be someone you trust, or comes with a good referral from a friend or relative, as they’ll become intimately familiar with your situation and your financial life. The first step is to hire an agent and get him or her authorized to speak on your behalf with your lender. You should contact your lender and ask them how to get your agent affiliated with your account. They will either provide the documentation you need, or tell you what to send to them. Usually, the lender will want a note from you that authorizes the agent to speak on your behalf, with the appropriate data included, like the agent’s name, company, contact information, you loan number, your signature, and the date. This should be the last time that you are in contact with the bank, as the agent will take over from here.
The three most important considerations for anyone looking to do a short sale are: What is my lender’s "recourse" against me? Will this affect my taxes? and, How much will this affect my credit? It all boils down to: how is this going to affect me? Why would I do a short sale, as opposed to just letting the bank foreclose on the home and take it away from me? These are the issues we’ll tackle today, and I’m fairly certain that there will still be plenty of questions in your mind. This is a complex beast, and we’ll take the issues in stride. One of the key considerations, and an issue that changes things dramatically, is: What is the nature of ownership?
