| In recent years, a number of lenders offered | | | | their credit rating. |
| promotional "teaser" rates to tempt people into buying | | | | Homeowners who have received a Notice of Default |
| homes. Today, many people are feeling the pinch as | | | | have another option: the short sale. A "normal" sale |
| those teaser rates come to an end and each | | | | occurs when someone sells a home and there is |
| mortgage resets to the actual interest rate. In fact, | | | | enough equity in their home to cover all liens and |
| foreclosures are near record levels because of these | | | | encumbrances including, but not limited to, mortgage(s) |
| teaser rate resets. | | | | or deed(s) of trust, judgments, property taxes, and |
| If a homeowner cannot meet their monthly mortgage | | | | costs of sale. A short sale occurs when someone |
| payment once or twice, often, the lending institution will | | | | sells a home but there is no equity in the home to |
| easily and happily forgive it, and simply expect the | | | | cover all liens and encumbrances. |
| homeowner to "double up" on the next payment. This | | | | To qualify for a short sale, the homeowner needs to |
| makes sense because things happen to all of us from | | | | provide a number of things to the realtor: First, they |
| time to time when there just isn't quite enough money | | | | need to provide some mortgage/trust deed details, |
| in the bank to make the mortgage payment. | | | | including the most recent home loan/mortgage |
| But after a series of missed payments, warning bells | | | | statements, and the Notice of Default, if any. Second, |
| go off at the lending institution. They become worried | | | | they need to supply some financial information to |
| that their investment in the borrower - the homeowner | | | | prove that they have been, and will continue to be, |
| - is at risk of default. At some point, usually after about | | | | unable to keep up with their home loan payments. This |
| 3 months of defaulted payments, the lender will file a | | | | financial information includes, among other things, a |
| Notice of Default with the county recorder. The notice | | | | copy of their most recent tax return, the last two or |
| is mailed to the borrower and other affected parties. | | | | three pay stubs, and the most recent bank account |
| Homeowners who receive a Notice of Default still | | | | statements. Finally, the homeowner needs to write a |
| have a few options available to them; all is not lost! | | | | "hardship letter" which describes, in the homeowner's |
| Among their options are special forbearance, partial | | | | own words, the cause and severity of their financial |
| claims, deed-in-lieu of foreclosure, loan modification, and | | | | situation. |
| even bankruptcy. If these options fail or disappear | | | | Homeowners should do their best to keep up with their |
| before the homeowner takes advantage of them, the | | | | regular mortgage payments. However, if things get |
| mortgage or trust deed agreement will ultimately end in | | | | tough and a Notice of Default is issued, there are |
| a foreclosure. That's something that no homeowner | | | | options that the homeowner has. One of the best |
| wants: to lose a home AND have a foreclosure on | | | | options for most is the short sale. |