Every month thousands of homeowners located in Orange County, Riverside County and San Diego County receive a Notice of Default from their lender. A Notice of Default (“NOD”) signals the beginning of the foreclosure process and should be an indicator to the homeowner that they need to try and find a resolution as quickly as possible. In California, lenders have to wait 90 days from the day the NOD is filed before they can issue a Notice of Trustee Sale (“NOT”). The sale date indicated in the NOT has to be 21 days from the filing of the NOT. In effect, once a NOD is filed the clock starts ticking. While there are ways to delay or prolong the foreclosure deadlines, one thing is for sure, eventually, if the homeowner fails to reinstate the past due amount or refuses to obtain a loan modification or fails to successfully short sell the property their home will be foreclosed on.
The question for many homeowners is “How do I know when it is time to short sell?” In other words, how long can they push the envelope and still have time to short sell. Like loan modifications, a short sale is a loss mitigation tactic used by lenders to minimize the losses for the investor of the loans. Lenders agree to short sales because, in most cases, a short sale will result in less losses to the investor than would a foreclosure. However, the longer the delinquency and the closer to a trustee sale that a homeowner gets, the more difficult that transitioning into a short sale becomes.
Deciding whether or not to short sale depends on what would need to be done to keep the house. First, homeowners should “realistically” determine whether or not obtaining a loan modification is possible. While homeowners have every right to work directly with their lender, the best advice is to approach someone that is experienced in loan modifications such as www.californialoanmodificationattorney.com and ask for an independent evaluation of their chances at successfully obtaining a loan modification that will result in a payment that is affordable. Homeowners should stay away from entities that promise results that are too good to be true or that are unable to provide a detailed explanation as to why or why not a loan modification has a chance of being granted. Homeowners must also beware of the fact that many of these companies will make promises to assist on a loan modification hoping to lure them into a short sale. Second, homeowners should explore whether or not filing a Chapter 13 Bankruptcy is a viable option. My experience has indicated that most of the time a Chapter 13 provides only a temporary band-aide. However, homeowners should at least take the time to exhaust this possibility. Third, homeowners should determine whether, in the event they cannot save their home, they would like to purchase a home in the near future. If a homeowner has a realistic chance of qualifying to purchase a home in the near future the homeowner should determine whether they would like to waiting period to buy a new home to start sooner or later. Most homeowners who make this determination choose to sell quickly so that they can get back into the buying pool as quickly as possible.
The simple answer to the question ”when to short sell” is as follows: whenever the homeowner is resolved to the fact that keeping the home is either impossible or not in their best financial interests. While staying in the house for as long as possible without making a payment might seem attractive, in the long run, it might not be the best course of action.
Both loan modifications and short sales are getting tougher and tougher to obtain. Increasing property values have started to shift the leverage in negotiations from the borrowers to lenders. Waiting could result in a significant amount of unnecessary stress and anxiety. The best thing to do is to take control of chaos by being realistic about what options are available.
If you are thinking of short selling your property and you are located in Orange, San Diego, San Bernardino or Riverside Counties contact Michael Gaddis, J.D. at 888-242-2272 or Micheal@MichaelGaddis.com . For more information related to short sales please visit www.sdshortsaleattorney.com or www.michaelgaddis.com.
Jenny Winford July 23rd, 2017
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