In the midst of the real estate crisis, one out of seven homeowners is experiencing mortgage troubles. Homeowners across America are faced with stressful situations and are not sure where to turn. The good news is no one has to go through this alone. We are here to help.

Having the right person—one who is armed with information and knowledge about the real estate industry and its ebbs and flows—will make a difference in the outcome of your housing and financial situation. In this post, we'll cover a few basic tenants every homeowner should know when tackling such troubles.

1. An Experienced Realtor Can Save You From Foreclosure

A homeowner in the middle of a financial crisis sometimes cannot think clearly. Your mindset is cloudy and your decision-making isn't at its best. Sometimes panic will set in and the homeowner will do nothing, making even more of a distressed situation.

Now is not the time to ignore the mailbox or the phone calls from the bank. Be proactive. Call an experienced real estate agent who is well-versed in the options available to you, as well as the ramifications, both good and bad. An agent with experience in distressed properties will be able to negotiate with the bank on your behalf. He or she is your advocate—guiding you through the myriad of options and their requirements.

2. You Have Options: Foreclosure vs. Short Sale

And what are those options, exactly? It's important to note that foreclosure is not your only avenue (more on that later). You may be a candidate for a short sale transaction.

The major difference between a foreclosed home and a short sale is the damage to the homeowner’s long-term credit.

  • Short sale – This occurs when one sells their home for less than the balance owed. The bank agrees to a short payoff at the close of the transaction. There is no cost to the homeowner. All closing expenses are paid for by the short sale lender. All liens are negotiated and are settled at closing.
  • Foreclosure – This is a process wherein a lender will take the property from the homeowner. Long-term credit damage will occur to the owner. Legal fees, court costs, and growing fees will accumulate and be added to the total owed to the bank. A foreclosed homeowner risks a deficiency judgment.

It is critical to work with an agent who has experience in the distressed property arena. It’s unlike any other market we have experienced. Without the experience of a trusted partner, you could be in jeopardy of making huge financial mistakes. Short sales have only a 20% closing ratio by an inexperience agent. That ratio climbs to 80-90% when using a trained professional.

Consult with your agent or financial advisor to determine the best course of action for you and your family.

3. Avoiding Foreclosure Benefits Both Homeowner and Lender

Now more than ever, lenders are trying to work with homeowners who are experiencing missed payments and financial hardships. Lenders do not want to be property owners. They have quickly created options that allow homeowners to avoid costly foreclosures. A foreclosure will cost the lender far more than a short sale or a loan modification. As a homeowner, you should always try to avoid a foreclosure, which can bear many harsh consequences for years to come.

What Happens When a Foreclosure is Inevitable?

If, despite your best efforts, you find yourself faced with a foreclosure situation, it's important to understand what that process will entail. Below is my rundown of how a foreclosure works.

Stages of foreclosure:

  1. Stage 1: The stage just before a lender makes the decision to post a legal notice to foreclose is a pre-pre-foreclosure.
  2. Stage 2: The stage after the legal notice was served and just before the court house sale is the pre-foreclosure.
  3. Stage 3: The stage when the sale on the courthouse steps occurs is the actual foreclosure event.

Post-foreclosure is the period whereby the lender may seek a deficiency judgment. They reserve the right to collect the deficiency for years to come.

Beware of Foreclosure Review Scams

There are many foreclosure rescue scams being offered by con artists. They are taking advantage of the distressed homeowner by preying on their vulnerabilities. At no time should any distressed homeowner pay a fee for service for foreclosure rescue. That simply is a scam. A knowledgable experienced agent will be able to provide guidance and help you explore the options available to you and your unique situation.

There is Hope for the Future

I hope your situation is temporary and you can figure out a plan that will solve your financial crisis. If you need more information we are here to help. We can be your advocate and will be able to guide you through your options as you make some personal financial decisions.

We have the answers and will available to help you customize a plan that will fit your specific needs. Feel free to call for your immediate and private consultation. Every homeowner deserves a resource they can trust.