Sunday, March 1, 2009

Short Sale: When You Can't Qualify for Mortgage Relief Through HASP

The Hook has an article by Lindsey Barnes about a recent foreclosure-short sale seminar sponsored by a local lender and a RE company. A "short sale" is the term used to describe what happens when a lender agrees to let a house be sold for less than what a mortgage holder owes, in order to settle the debt. This is done in lieu of foreclosure. For the debtor, short sales have the advantage of preserving a credit score; for the bank, a short sale may take less time and expense than a foreclosure, and get the property resold faster.

Before a homeowner considers a short sale, however, they may wish to consider foreclosure mitigation. There is help available for some homeowners who face foreclosure, through the new Homeowner Affordability and Stability Plan (HASP). Some basic info and commentary is available in a post here. Everything you could possibly want to know is available via the US Department of Housing and Urban Development.

Not everybody can qualify for assistance through HASP. Those who are unemployed, or who have a mortgage resetting to a price they cannot possibly afford monthly, may want to consider a short sale. Some very basic information about how to arrange a short sale with a lender is available in this eHow article.

For prospective buyers, a short sale may bring a good price. The biggest downside to a short sale, however, is that the bank's response time to a buyer's offer may be months instead of days, which may interrupt moving/job/schooling plans. This will likely change as more lenders are arranging short sales and gaining experience in the process.

Update: For local information on options available to troubled mortgage holders, contact the Piedmont Housing Alliance. (Thanks, Amy Webb, for the reminder. Also read the comments following this post.)


Amy Webb said...

The best move for folks facing default or a short fall in making their mortgage payments is to contact Piedmont Housing Alliance immediately for counseling and assistance. PHA, Central Virginia's only HUD approved housing counseling service, offers homeowners at all income levels information and aid. PHA offers a wide range of services to help you
▪ assess how the downturn has affected your finances
▪ budget and manage your money more effectively
▪ decide if trying to keep your home is the best choice
▪ leave your home in the least disruptive manner if that is the right move for your family or
▪ negotiate with your lender to hold on to your home.

PHA Housing Counselors are professionally trained and certified to liaise with Lenders on your behalf regarding
▪ Short term repayment plans
▪ Short sales
▪ Loan modifications
▪ and many other possible remedies for your situation.

see my blogpost here for more info or call PHA at 434-817-2436.

solvent homeowner said...

love it when the real estate agents come on the bubble blog. shows the reality of the housing market. but this info could be extremely helpful for those in trouble.

Real C'ville - The Bubble Blog said...

Thanks for the info and links, Amy.

Amy Webb said...

Thanks. Glad you found the info helpful. I would reiterate that PHA can assist homeowners regardless of their income level and the size of the loan on which they are about to default. Though PHA is known locally for providing services to first time and low income home buyers seeking to purchase a house, their foreclosure counseling services are open to all members of the Central VA community.

Real C'ville - The Bubble Blog said...

MAKING HOME AFFORDABLE is the name Treasury is using for the Homeowner Affordability and Stability Program. Guidelines for mortgage mods, refinancing, and an eligibility tool to see if you qualify available at