The big question from our clients these days is whether they should try a loan modification or a short sale.  If you are an investor and offering short sales pay attention.  If you are offering any services other than loss mitigation or loan modification like short sales or FHA short refi’s you should be offering your clients an option to stay in their home.  Here at ALMS we see many different scenarios.  We negotiate both loan modifications and short sales for investors helping Foreclosure clients.

When we train a new investor one of the first things we teach is how to best help the client.  Lenders are much more open these days when a homeowner has fallen into default and facing Foreclosure.  Our investors first take an application containing the homeowners finances to ensure that, whatever the clients choice, we have been able to make an informed decision about what options are available.

If the application is turned down by our loan modification than a short sale certainly is an option.  An investor can be tempted to try a short sale first because of the great deal of money that can be earned.  My question to those investors is this - Wouldn’t you rather help a client save their home from Foreclosure and earn a little cash flow through a referral program (not having to handle it yourself) than to find out a week before close that the homeowner wants to back out because they have rethought the situation or the bank has called and offered them a deal they can’t refuse?  How many times has this already happened to you?

We all like to make money but at what cost?  We train investors nationwide on short sales and the Foreclosure business in general but our focus is always the homeowner and what option best suits them.  I sleep very well at night knowing the good we are able to offer our clients and the countless deals we have been able to work out allowing the homeowner to keep the home.

If you are an investor, realtor or mortgage broker you should give serious thought to the services you are currently offering your clients.  Get the facts.  Know what is best for your clients and make better use of your time for those clients that really need your help.

Written By:  Donna L. Atwater of American loss mitigation Services, short sale Training, loss mitigation Referral Program, Facing Foreclosure

The real estate market has undergone some extreme shifts in the past 2 years.  Foreclosure rates have soared giving rise to Foreclosure help and Foreclosure scams.  Many states have implemented Foreclosure protection programs to try and alleviate some of the companies out there scamming homeowners and misrepresenting their services.  With Foreclosure rates still continually rising homeowners are desperate to know their options.  Unfortunately this can lead to them putting their faith in someone that may not have their best interests at heart.

There are only five real options to a homeowner facing Foreclosure.  The first and least feasible is a reinstatement.  A reinstatement of a loan that has fallen into default requires that the homeowner pay the entire amount of arrearages to bring the loan current.  For most homeowners this is not an option as they have usually experienced some type of hardship.

The second option for a homeowner that wants to stay in their home is a refinance.  This can be accomplished whether the homeowner does or does not have equity.  A homeowner that has a defaulted loan but has equity might have the option of doing a traditional refinance provided their credit scores have weathered the storm.  An option for a homeowner whose loan is in default, but lacks equity, has the option of attempting a FHA short refinance.  There are certain requirements and should a homeowner feel their are interested in either of the two refinancing options should quickly do their research.  It is imperative to act quickly in case they don’t qualify.  This will give them the time to pursue another option.

The last option available for someone wanting to stay in their home is loss mitigation or loan modification.  A loan modification is actually an option under loss mitigation.  loss mitigation is simply an solution that a lender offers a homeowner in an attempt to avoid Foreclosure.  There are many other programs besides loan modification that qualify as loss mitigation like a repayment program or forbearance agreement.  However, if possible, a homeowner should try to pursue a loan modification.  A lender, in today’s market, is much more likely to pursue a loan modification than, say, maybe a year or two ago.  In most cases a loan modification will work out to be more financially advantageous for a homeowner that has fallen behind and facing Foreclosure.

Not every homeowner has the option of staying.  The fourth option when facing Foreclosure is to sell the home traditionally.  This can either be with a Realtor or as a “for sale by owner”.  Because of the time constraints it is advisable that a homeowner seek a Realtor’s services.  The homeowner should also call their bank and let them know what they are attempting to do.  It may not always buy the homeowner more time but a bank may be less likely to foreclose if they know they are going to receive a full payoff if the home is sold.  In some cases it can cost the bank a considerable amount of money just foreclosing on the property and trying to list it themselves as an REO.  Having the homeowner sell the home before Foreclosure would ensure they get full payoff.

What happens if a homeowner can’t afford to stay and lacks equity?  This is when a homeowner might pursue a short sale.  There are two people you can turn to in this situation.  A homeowner that is facing Foreclosure will be approached by many.  The two professionals they want to consider when they are not able to stay and do not have the equity is a seasoned short sale Realtor or an investor.  Some might deter a homeowner from contacting an investor but in many cases an investor has much more experience with short sales than a Realtor.

For an investor it is imperative that keep they keep the homeowners best interests at heart.  We work with investors nationwide and one thing we strive to teach them is to understand deficiencies, deficiency waivers, promissory notes and other options to cure the shortage.  This is another area that Realtors tend to fall short in.  If the investor has learned short sales the right way they will act on behalf of the homeowner.  There are many investors out there that represent themselves as short sale experts.  It is imperative for the homeowner to do their research.  There are many ways to accomplish a short sale in this market with the use of an option contract rather than using a deed transfer tactic.  This is, often times, very scarey for a homeowner.  If you do not feel comfortable signing over your deed than simple do not proceed.  Our investors are trained to use an option contract that not only protects them but especially protects the homeowner.

Whatever the homeowners choice should be, they should feel comfortable.  It is very important for them to do their research on the individuals they are dealing with including the professionally licensed.  If a Realtor tells you their specialize in short sales than Google their name on the internet and look at all their listings to determine just how many they actually are handling.  The same goes with an investor or a person offering loss mitigation solutions.  More importantly, move quickly.  Time is the one thing a homeowner does not have a lot of.

There are still investors out there that have steered away from short sales because of their complexity.  short sales are definitely the “thing” right now.  I am not even talking about the past year.  I am discussing the “now” in the market.  Lenders are becoming increasingly short sale friendly and their guard is seemingly dropping with the talk of the bailout turning into reality.  Now is the time for investors to learn short sales if they haven’t already.  If you are looking to learn more about loss mitigation for your clients or short sales as an investor  and your desire is to truly help a homeowner than please visit our website at www.americanlms.com/training or visit http://www.dontwalkawayplan.com.

Written by Donna Atwater, American loss mitigation Services, Inc.