Foreclosure and Short Selling

Barbel

New Member
Messages
384
Location
Phoenix
Has anyone had to foreclose or short sell their home recently?
Or does anyone work in real estate or at a mortgage company and is familiar with foreclosing or short selling?
What all is involved and do you need to do anything to help prepare for it?
What happens to the homeowner after the process (like when can you buy another house, how badly does your credit get hit etc.)?

We aren't at that point yet, but my boyfriend and I really want to move back to Texas and our house is worth 40% less than what we are paying for it. :( We are just trying to discuss and look into all our options. We are hoping to be back in Austin in about 2 years and need to start a plan and getting our funds together.
TIA
 

Mel&Keith

Mod Squad Member
Messages
7,180
Location
Pasadena, TX
We've bought a bank owned foreclosure and know a little from the buyer's end about short sales. I'm not sure how a foreclosure actually works from the seller's end but from the buying end the process takes weeks to months longer than a conventional sale. For a short sale, the seller has to go through an approval process with the bank to be approved for what price the house must be sold for. I believe that the bank has to approve all offers and it takes weeks if they're moving fast and months if they drag their feet. We spoke with the seller of a short sale a couple months ago and he said that he was already approved with his bank for the short sale and had lost 4 offers over 8 months because the bank was moving so slow. I would suggest looking through real estate listings and finding a realtor who has a lot of foreclosure and short sale listings. Ask them what they can tell you. They'll probably be a more helpful place to start than calling the bank.

Also, it would be a last resort but you might consider renting your house out until you have enough equity to sell.
 

Barbel

New Member
Messages
384
Location
Phoenix
We've thought about renting, but houses like ours rent for about $300 less than what our mortgage is, so we'd have to pay a new mortgage or monthly rent plus that to cover our current mortgage. Unless we can find a place for like $500 a month or my boyfriend gets a job making double what he is now, and neither is very likely haha, then we can't afford to rent it out. It is on our minds though.
 

Mel&Keith

Mod Squad Member
Messages
7,180
Location
Pasadena, TX
It's really great that you're thinking ahead and not waiting until you don't have options. A lot of people aren't that proactive. We're meeting with our realtor tomorrow so I'll see if she can give me any insight as to how the foreclosure and short sale process begin and work.
 

thegeckoguy23

New Member
Messages
2,231
Location
goffstown NH
my father builds and fixes homes and sells them so buys fixs sells and he had to foreclose on a house hw bought recently but its ok atm my family has 3 homes a place where me and my mom live normaly then we have a lake house and then a place my dad is fixing up
 

Barbel

New Member
Messages
384
Location
Phoenix
It's really great that you're thinking ahead and not waiting until you don't have options. A lot of people aren't that proactive. We're meeting with our realtor tomorrow so I'll see if she can give me any insight as to how the foreclosure and short sale process begin and work.

That would be wonderful! Yeah, I like to be as prepared as I can be and I don't like to be caught off guard. We are kind of in a crappy situation with our house, so we are trying to make the best of it, because I don't want to look back and say "I wish we would have done that instead." Even if we end up foreclosing I want to make sure and do it the right way.
 

Mel&Keith

Mod Squad Member
Messages
7,180
Location
Pasadena, TX
Ok, sorry it's taken me so long to get back to you! (This is all assuming that things are working the same in Arizona as they are in Texas)

The federal government is telling the mortgage companies that they need to work with their customers to avoid foreclosure so it's a pretty good time to try and negotiate with them. How upside down you are on your house will probably determine what you'll ultimately have to do.

Right now some banks are letting the homeowner deed the house back to them (which is still considered a short sale) without having to go through the process of trying to sell the house themselves. Most have been giving $1500 for moving expenses and writing the rest off. They're saving having to pay lots of fees and commissions this way and it's the easiest option for the homeowner if the bank with approve it.

The next option is a regular short sale. You'll have to call your lender to find out how you can start the process and how it will affect your credit afterwards. The process can take a pretty long time since you are basically selling the house yourself but then waiting for the bank to approve every offer. Private mortgage companies have been moving faster on this lately but the big banks are still pretty slow with the paperwork. Right after the bail out they were getting paid for any toxic assets they were holding and purposely dragging their feet but now there are incentives to get these properties sold so that really helps the homeowner.

If you find out that credit will be affected so much that you need to stay in the house you can discuss restructuring your loan with the mortgage company. This is what they're being encouraged to do before short sales or foreclosures so that people can stay in their homes. You may be able to get better rates and pay your loan off faster so at least you won't have to stay as long before you can afford to sell.

I'm so sorry for you and people in other places that had a big housing boom because you really got screwed when the banks where writing these high risk loans that helped cause the bubble to burst. Our market here is completely flat but at least we're not losing equity overnight.

The bottom line is just talk to your lender and let them know that you really want to work something out. Keep talking to different people there until you get to someone who is willing to help you.
 

Barbel

New Member
Messages
384
Location
Phoenix
Wow! Thanks so much for the information, it's really helpful. It probably isn't exactly the same here, but I bet most of it follows the same lines.

Deeding the house back to the bank sounds like the best option for us for sure, but, like everything else, I don't know how much that would effect our credit. We have really awesome credit and we really don't want to screw it up too much because we definitely want to buy another house.

Does anyone know how long you have to wait after you short sell or foreclose on a house before you can buy another one?

I guess I need to start calling the bank which I really don't want to do. We refinanced just before Christmas and it took us, I don't like 6 months of being jerked around before we finally tackled that feat so I am just anticipating how much fun it will be to discuss foreclosing/short selling.

Should I ask a realtor about any of this or would they just direct me to a bank?

Thanks again!
 

goReptiles

New Member
Messages
2,639
Location
Georgia
It's not a good thing to go into foreclosure, especially for your credit. I'm not sure about short sale. I almost bought a house that was in short sale, but after looking at it, I realized how much work was needed. The foundation was all screwed up.

There are so many available that it's hard to sell these days, even at low prices. The house that I looked at in short sale, is now in foreclosure because no one wants to buy it. It's in a great location, great house, but too many issues (most are small and cosmetic but all add up to a lot). I've seen short sales sit on the market a while. You just have to play the game.

I think that anything other than just selling will have a negative impact on your credit. I'm not 100% positive though. All I know is that you don't want a foreclosure on your credit.
 

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