Avoiding Foreclosure Is Possible
in Central Connecticut

In our current economy, many Central Connecticut home owners are underwater, especially if they either purchased or re-financed within the past 4-5 years. Home values have fallen back and in many areas have reached a stable range. The market is, however, affected by home owners that have just walked away and allowed the home to go into foreclosure, or have made an active choice to get their home sold by means of a short sale.

Short term solutions are available to home owners that have had some type of problems in their lives. For these owners, there is the possibility of getting their mortgage modified, to be easier to manage. This is the HAMP or Home Affordable Modification Program.  This program is designed to help financially struggling homeowners avoid foreclosure by modifying loans to a level that is affordable for borrowers now and sustainable over the long term. The program provides clear and consistent loan modification guidelines that the entire mortgage industry can use.

Another alternative would be to attempt to sell the house as a short sale ad resolve the mortgage differential with the bank with their cooperation.

First, the definition of a short sale is when the bank agrees to accept less than the value of the outstanding mortgage on the home as payment for the note. This is accomplished by first staying in contact with the bank, and by finding an experienced short sale real estate agent that understands the process, and has successfully taken homes to completion of the process. The short sale process is getting to be so common, that many banks will suggest area real estate agents that they trust to get the job done.

The banks and the agent will need to thoroughly discuss the requirements with the home owner, always maintaining professionalism and confidentiality. Not everyone may qualify, as there are specific hardships that the banks would recognize and allow as cause for a short sale.

These hardships are as follows:

• Unemployment:  No job no revenue stream to pay the bills
  Reduced Income: If both incomes were required to make the purchase and one person lost their job or had their job downsized, the balance has been disrupted.
• Divorce: If they can’t live together they certainly can’t maintain the home together.
• Separation: Similar to divorce, but a legal separation would be needed as evidence
• Medical Bills: Medical costs can be staggering and easily pull a family’s finances down.
• Too Much Debt: Credit cards and time payments can also get out of hand.
• Death of a Spouse or Family Member
• Payment Increase: This can be caused by an adjustment common with adjustable rate mortgages, or over time with escrow tax increases if a municipality or county has fallen on hard times.
• Business Failure
• Job Relocation: Even if the income is sufficient, you can’t be expected to maintain 2 residences.
• Illness
• Military Service
• Incarceration

A combination of either of these issues which individually may not create a hardship, but together creates a burden that causes the home owner to fall behind on their payments.

Banks do not want to be in the real estate business as every home that sits in their inventory as a non performing asset takes away working resources that they can be using to help other people.

Even with the banks on board with a short sale, there may still be those persistent phone calls and communications from the loan servicing departments of banks, as often within a bank, one department doesn’t understand what another department maybe doing on the same issue.

Short sales are not simple, but they can be productive and when the agent handling the short sale understands the process, they do work. When the system flows properly, the time to close on a short sale can typically be similar to that for a conventional sale, with the new buyer getting a deal on a home and not having to deal with the issues created by a vacant foreclosure.

Short sales do work. If you are trying to avoid foreclosure in Central Connecticut and are in danger of losing your home, we can help. Call my cell at 203-206-0754 or email me below for an appointment to sit down and discuss your problem.