Jan
04

Short Sale Vs Home Loan Modification

By
G Allen Tucker asked:

Short Sales are when a lender is “shorted” on the balance of the mortgage that they are holding. The client can’t afford their monthly payment and have to find other means on getting out of their current financial situation, by selling their home. Doing a short sale could be like wrestling with a Tiger and trying to win. There are so many stipulations on doing short sales and most of the lenders won’t even talk to you about doing one.

Lenders are leery about the short sale process; they’re going to lose money on the sale itself. Lenders will determine if the short sale is a good step for the client and also for them. Short Sales are a case by case process, which is only determined by the lender themselves. Most lenders are losing anywhere between 40k-100k per sale; which is going to affect their bottom line.

The work on the part of the seller and buyer on a short sale is overwhelming. The lender doesn’t have a specific department dealing with short sales directly, like with Home loan modifications (loss mitigation department). The seller could be making a lot of phone calls to the lender just to get to the specific person. Here is some basic information that is needed on a short sale, bare in mind that every lender is different.

• Call the Lender

• Submit Letter of Authorization

• Preliminary Net Sheet

• Hardship Letter

• Proof of Income and Assets

• Copies of Bank Statements

• Comparative Market Analysis

• Purchase Agreement & Listing Agreement

Home loan modifications are in essence the restructure of the original contract with the lender. Many adjustments can be made on the contract to bring it to a current status, if delinquent. Lenders will be able to restructure the current loan by lowering the interest rate, lowering the monthly payment, reducing the principle balance or changing the terms to a fixed rate, (if current loan is an ARM, adjustable or interest only loan).

Currently lenders are gearing towards home loan modifications. Lenders are feeling “safer” doing a loan modification because they are not going to lose money. The process for a loan modification is easier for the owner. There is a specific department with the lender that you can speak with (loss mitigation department) when wanting to do a loan modification.

The economy being in the situation that it is currently, and from my experience, home loan modifications are the way of the world. It is actually a “win/win” situation for the home owner and for the lender. The home owner gets the relief that they are searching for, and the lender get to bring the delinquent contract to a current status, showing profit.

If you are feeling the pinch of a delinquent home loan and stressed about losing your home to foreclosure, we are here to assist you. We offer a money back guarantee if we can’t get your delinquent home loan modified.

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