Deed in Lieu of Foreclosure

A deed-in-lieu of foreclosure would involve our professional staff's negotiation with your mortgage lender/servicer to obtain a complete release from your existing mortgage debts in exchange for your agreement to give the home to the mortgage lender/servicer. This foreclosure workout alternative would enable you to avoid the unpleasant and time-consuming collection and legal process and would protect your current and future assets from pursuit by the mortgage lender/servicer for any losses that they may suffer if the ultimate sale of your home does not satisfy the outstanding balances of your existing mortgage. In effect, you are able to move out and move on. While this workout alternative will appear as a derogatory item in your credit report, it may be less damaging to your credit profile than a foreclosure.

Short Sale

A SHORT SALE involves the sale of your home at a price that is less than the total amount that you owe on your existing mortgages. Similar to a pre-foreclosure sale, this workout alternative may be an appropriate solution for you because you either cannot afford to keep your home or you CHOOSE not to keep your home. A SHORT SALE is a complicated, but worthwhile, workout alternative. The mortgage lender/servicer agrees to accept less than the full amount of the outstanding balance due from you as payment in full. They would also agree not to pursue you for any losses that they may sustain. In the event that there is a first mortgage AND a 2nd mortgage on your home, approval from BOTH the first mortgage lender/servicer and the second mortgage/lender servicer would have to be obtained to effect a SHORT SALE transaction. A successful SHORT SALE transaction will enable you to sell your home and relieve you from having any further financial obligations on your existing mortgages. This workout alternative may also limit the damage to your credit history.

Negotiating a short sale with the lender is a difficult process, generally because it is a daunting task finding a bank officer who has the authority to accept a discount. We contant the lender’s “Loss Mitigation Department”. The process often involves a lot of waiting on hold and being bounced around an intricate maze of automated voice mail systems. We know how to get in touch with the right person, then the negotiating begins.

From the lender’s perspective, a short sale saves many of the costs associated with the foreclosure process - attorney fee’s, the eviction process, delays from borrower bankruptcy, damage to the property, costs associated with resale, etc. In a short sale scenario, the lender receives cash flow faster, so they are able to cut their losses. Our job is to convince the lender that they will fare better by accepting less money now than going through the foreclosure process.

The lender will want some information about the property and the borrower. Specifically, the lender wants to know what the property is worth. The lender will generally hire a local real estate broker or appraiser to evaluate the property (called a broker’s price opinion or “BPO”). We can submit our own appraisal or comparable sales information. In addition we will want to offer as much specific truthful negative information about the property as possible.

Also, we can include some relevant information about the neighborhood and the local economy if things are declining. A contractor's bid for repair estimates should also be submitted.

The lender will also ask for financial information about the borrower. Sort of a backwards loan application, the borrower must prove that he is in financial difficulty and unable to afford the payments. The borrower must show that he has no other source of income or assets to repay the loan. The borrower should submit a “hardship letter”, which describes how much financial trouble the borrower is in.

Finally, the lender generally wants to see a written contract between the buyer and the seller. The lender wants to make sure the seller isn’t walking away with any cash from the deal. Generally, the contract must be written so that the buyer pays all costs associated with the transaction, so that the “net cash” to the seller is the exact amount of the short pay to the lender. A preliminary HUD-1 settlement statement is often requested.

The process of the short sale is not extremely complicated, but the success or failure of the deal depends upon how it is presented it to the lender. Many novice investors and realtors give up at short sales quickly because their deal is rejected. Like any business, short sales success takes practice and experience. Generally speaking, loss mitigators are pretty good at spotting an amateur investor. If you know what you are doing, the loss mitigators are more likely to make a deal with you and that's where Amerihope Alliance Legal Services, LLC will help you succeed.

Amerihope Alliance Legal Services, LLC will negotiate with your first mortgage lender/servicer and any second mortgage lender/servicer to obtain approval of a SHORT SALE transaction for your benefit. This process would include extensive negotiations with your mortgage lender/servicer, including a comprehensive presentation of the advantages that a SHORT SALE would have for your mortgage lender/servicer instead of foreclosing on your home in order to persuade them to agree to a SHORT SALE transaction.