Hello to all Silicon Valley and San Jose Readers!
Before anything, best wishes to all for a relaxing Memorial Day week end. Let us hope that next Monday will really bring out the sun and heat after a few unusually chilly days in Silicon Valley.
A few days ago, I was reading an article
on CNN about the fact that 31.4% of current borrowers (close to 16 million US home owners) were still underwater in the first quarter of 2012. This number, which has decreased from one year ago (32.4%) leads me to believe that, unless an economic miracle happens or a partial wipe-out of their debt occurs tomorrow, many families have dark days to live ahead of them.
There is some good news to share though. The Obama Administration Housing Programs to help underwater families avoid short sales and foreclosure are still in place. Also, following the robot-signing scandal, lenders have reached out to distressed home owners and are carefully reviewing thousands of cases which could have been improperly processed. More recently, and as a direct consequence of the settlement, lenders have been asked to speed up their foreclosure review process (starting in June 2012) and will in my opinion be more inclined to approve short sales than let homes sell during auctions. All of this to say that short sales are likely to stay and continue to account for a substantial share of home sales in the coming years.
In view of this, I thought I would share with you some of the most popular short sales terms used by real estate agents as well as lenders. Not only these definitions should dispel a few myths and/or misinterpretations about short sales but also should enable you to be more comfortable when you hear your advisers talking about your own situation and available options to foreclosure.
Hardship is an event or a series of events that change your ability to keep current in your mortgage payments. All incidents are not considered a hardship. For instance, equity loss on your home is not considered a hardship. The following events are usually recognized as hardship by lenders: Job loss, Business failure, Illness and associated medical costs, Divorce or death of a spouse, Natural disasters
Breach letter (aka Letter of Demand) is a letter sent to you when you are 30 to 45 days late in your mortgage payments. Remember to always document the fact you are in a position of breach of your repayment contract
Notice Of Default (aka NOD) is the official notice from your lender that you have defaulted on your mortgage. The NOD formally begins the foreclosure process. The NOD also outlines the reinstatement period
Deed in Lieu of Foreclosure is an alternative to a short sale through which you agree to trade your property to the lender in exchange for the cancellation of your debt
Making Home Affordable Program is the basis of the Obama Administration program to help the recovery of the US housing market which offers alternatives to foreclosures such as mortgage refinancing (HARP), loan modification (HAMP) and other alternatives through HAFA
Reinstatement Period is the time/date stipulated in the NOD by which your lender may reinstate your account in good standing
Notice of Sale is the notice you will receive if you are unable to reinstate your loan in good standing. The notice of sale explains when and where the foreclosure sale will be held
Foreclosure Sale (aka Sheriff's Auction or Trustee's Sale) refers to event during which your property will be auctioned and sold to the highest bidder
Real Estate Owned (aka REO) is the term used to designate properties owned by lenders. Transfer of ownership happens if the Foreclosure Sale is not successful
Servicer (aka Loan Servicer) designates the financial institution that collects your monthly mortgage payments and has responsibility for the management and accounting of your loan.
© Sophia Delacotte CDPE, SFR, CHS
San Jose Realtor
Cell: (408) 717-2575