trouble with mortgage

Hi,

In short sale the deficit amount is forgiven. Shore sale is the sale of your house for an amount less than the amount owed on the mortgage, as agreed to by the lender. This will hurt your credit score negatively, though less than a foreclosure. After a short sale, the lender can demand the remaining balance from you. If you can't pay, the lender can garnish your wage. As for the tax issues, in short sale too, you will have to deal with the tax man.

However, as you have already got a new job, you can try to negotiate a loan modification with the lender. Write a hardship letter, and include a copy of your monthly income and expenditure. You will get a sample loan modification/hardship letter with this community. In loan modification the lender may lower the mortgage rate and extend the loan term. There can also be a reduction in the outstanding loan balance.

There are various criteria for Home Affordable Foreclosure Alternatives Program (HAFA). If you are facing hardship, and are thus unable to make mortgage payments, you can apply for HAFA. Moreover, the property should be the borrower's primary residence. When you apply for HAFA you will have to sign an Affidavit of Financial Hardship, and will have to provide your pay stubs.

As for the time within which you will have to pay off the mortgage, depends on the mortgage company. You need to talk about this to the mortgage company.

Thanks,

Aaron

1) Many sevicers on short sales require you to acknowledge personal liability on any deficiency. If foreclosed on you may or may not be liable depending if you are in a deficiency state or not. In Arizona usually can not be sued for deficiency after a foreclosure sale.

But in Nevada and many others they can come after you for a post foreclosure judgment.

HAFA Program to Aid Short Sales Points

Stands for Home Affordable Foreclosure Alternatives

Preappoved short sales terms from the bank if it participates.

Does not apply to Fannie or Freddie loans (about 70% of all first mortgages on Fannie/Freddie owned or guaranteed)

Said Mark Brandemuehl of Motovo, a brokerage and listing site. “States in recourse will increase their volume of short sales and deeds in lieu.” California and Florida, two of the hardest hit states with foreclosures, are both non-recourse states. Brandemuehl predicts the HAFA program won’t have much impact in these states due to this.

Servicers are very hard to deal with since they get far more fees to foreclosure, own and resell properties than they get under any of he modification programs which are basically voluntary unless your Fannie or Freddie - but they delay those modifications as long as possible to collect the servicing fees.

Hi Andrews,

If your lender agrees to forgive the deficit amount, then you will have to declare this as an income. Thus, you will have to pay taxes on the forgiven amount.

However, joining a HOME AFFORDABLE FORECLOSURES ALTERNATIVES (HAFA) program speeds up the whole short sale process. Generally it takes 5 months in HAFA to complete the short sale process.

Thanks,

Aaron

If you're having trouble meeting your mortgage payments you're not alone.
Hardship Mortgage Letter

Hi Andrews,

Aaron has given answers to almost all of your queries. However, I would like to add that, the eligibility criteria for HAFA are:
* Your house should be your principal residence
* The loan should be a first lien mortgage originated on or before January 1st, 2009.
* You have been delinquent toward the mortgage and have missed at least 2 payments
* The unpaid principal balance on the loan is no more than $729,750 for a single-family property, $934,200 for a dual-unit property, $1,129,250 for a three-unit property, or $1,403,400 for a four-unit property.
* "The total monthly payment on the mortgage (including principal, interest, property taxes, hazard and flood insurance, condominium association fees, homeowner’s association fees, and any escrow payment shortage amounts subject to a repayment plan) is more than 31% of the gross income of all borrowers on that mortgage."

Hi Amanda,

Thanks for sharing some info on HAFA :)

Aaron