Facing Foreclosure?

If you're struggling to make your mortgage payments or unable to continue them, know that foreclosure isn’t your only option. There are several "loss mitigation" strategies available to help you manage this challenging situation.

10 Options When Facing Foreclosure in Jacksonville, NC

When facing foreclosure, consider exploring these alternatives. A few examples include:

1. Deed-in-Lieu of Foreclosure: This involves voluntarily transferring ownership of your property to the lender to avoid foreclosure.
2. Loan Modification: Renegotiating the terms of your loan to reduce monthly payments or adjust the interest rate.
3. Bankruptcy: Depending on the type, this can provide temporary relief or even discharge certain debts, including mortgage arrears.

For a complete list of all 10 options, along with their benefits and drawbacks, consult a trusted real estate professional or legal advisor.

It’s essential to work with an attorney, accountant, and other financial experts before making any decisions. They can help you understand the implications of each option and guide you to the best solution for your situation.

What Is a Short Sale?

A short sale is another effective loss mitigation option. This process involves selling your home for less than the total amount owed on the mortgage. The lender agrees to release its lien on the property, accepting less than the full loan balance.

However, it’s important to understand the potential implications:

• Deficiency Balance: The lender may require the seller to agree to repay the remaining balance (the "shortage") or may pursue collection of this amount after closing.
• Tax Consequences: Forgiven debt may be considered taxable income, so consult a tax professional to understand your obligations.

Basic Steps in the Short Sale Process

The short sale process can be complex, but following these key steps can help:

1. Contact the Lender

   • Request information about the lender's short sale requirements. Each lender has specific guidelines and forms.

2. List the Property for Sale

   • Partner with an experienced real estate agent to market your property to potential buyers.

3. Prepare Documentation

   • Compile the required documents to meet the lender’s short sale requirements (see detailed list below).

4. Submit the Short Sale Package

   • Provide the lender with a complete short sale package, including the executed purchase agreement from a qualified buyer.

5. Obtain Lender Approval

   • Once the lender approves the short sale, they will issue a Short Sale Approval Letter detailing the terms of the transaction.

6. Close the Sale

   • Complete the transaction in accordance with the lender’s approval letter.

Documentation Typically Required from the Seller

Preparing the necessary documentation is one of the most time-intensive parts of the short sale process. Below are the commonly required items:

• Authorization to Release Information: A signed authorization form for each lender involved, signed by all borrowers.
• Financial Statement: A detailed overview of your financial situation, including income, expenses, assets, and liabilities.
• Hardship Letter: A personal explanation of the financial challenges leading to the short sale request.
• IRS Form 4506-T: Authorization for the lender to obtain your tax return transcripts.
• Tax Returns: The two most recent tax returns, including all schedules, W-2s, and other attachments.
• Pay Stubs: The two most recent pay stubs for all borrowers.
• Bank Statements: All pages of the two most recent bank statements from all accounts.

Other documents may also be required, including items prepared by your real estate agent, attorney, or short sale negotiator. If your lender has specific forms or additional requirements, ensure you provide the necessary materials promptly.

Need Guidance? We’re Here to Help!

If you’re considering a short sale or exploring your options to avoid foreclosure, we’re here to support you every step of the way. Schedule a consultation with Our Team to:

• Review your situation and explore all available foreclosure alternatives.
• Determine your home's market value and the cost of selling.
• Verify your eligibility for a short sale based on hardship, assets, and income.
• Understand where you are in the foreclosure process.
• Collaborate with professionals experienced in short sale transactions.
• Submit a comprehensive short sale package to your lender.
• Work to avoid deficiency judgments and address potential tax consequences.

Call us today at 910-650-9887 to start your journey toward financial relief and stability.