Frequently Asked Questions
At Access Loss Mitigation we understand that as a homeowner, falling behind on your mortgage payment or dealing with the dreaded possibility of foreclosure can be a traumatic experience and an extremely stressful prospect. If for whatever reason you are currently behind on your mortgage payments – or foresee that you will soon be unable to continue making your payments – take heart: you do have options. The best thing you can do in this situation is to get fully educated on your options and to be proactive about solving the problem.
ALM is here to help you identify and implement the best possible solution and to help you avoid foreclosure. Following a thorough analysis of your situation by our specialists, we will work with you and your lender to come up with the appropriate solution for your particular situation. ALM will diligently work on your behalf to negotiate and secure a fair agreement with your lender.
Quite understandably, many distressed homeowners simply give up and give in to the foreclosure process, often without being fully aware of the options available to them. Depending on your particular situation, the following options may be available to you:
Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure.Also known as voluntary conveyance, with a deed-in-lieu of foreclosure the borrower voluntarily transfers title back to the lender to avoid foreclosure. The lender then releases the borrower from the mortgage and repossesses the property.Keep Your Home Options
A Loan Modification is a change in one or more of the terms of a borrower’s loan, and results in a payment that the borrower can afford.With a reinstatement, the homeowner brings the mortgage current by making up for all missed payments and paying any late fees and penalties.Typically, when foreclosure is a result of a temporary loss of income, the lender may agree to a forebearance wherein they will allow the homeowner to delay payments for a short period or negotiate a payment plan to make up for missed payments over the course of several months. The lender may also agree to some combination between reinstatement and forbearance, enabling the homeowner to delay payment for a short period and then bring payments current by a specific date.A repayment plan enables the homeowner to submit payment of a portion of the past-due amount and penalties with future payments until the past-due amount and penalties are paid-off.
Also known as a real estate short pay-off or a pre-foreclosure workout, a short sale is an agreement with a lender to accept less than the amount owed by a borrower via a sale of the property to a third party. With this agreement, the lender releases the borrower from the mortgage, thereby preventing foreclosure.
Minimize damaging impact to credit: Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a “settled debt” and is significantly less damaging. With a short sale, your FICO score will not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.
Minimize financial exposure/liability: In many foreclosure situations, the lender will ultimately sell the property at a significant discount once they foreclose and repossess the property. The homeowner can then be financially liable to the lender. While the same may be true with a short sale, the difference is with a short sale the homeowner is still involved in the process and can therefore contribute their input and have more control over the sale price of the property and the potential associated liabilities. In a foreclosure, however, once the lender repossesses the property, the homeowner is typically defenseless with respect to what follows next.
In order to be eligible for a short sale, a homeowner must be able to prove to the lender that they are a victim to a “hardship” and are therefore unable to continue making payments on their mortgage.
A hardship situation is one that is the result of some extenuating circumstance that forced the borrower into a position where they can no longer afford their mortgage payments. While every situation is unique, some common examples of hardship include:
• Unemployment or loss of primary income source
• Inability to work due to health crisis
• Mounting medical expenses
• Employment relocation
• Failure of business
• Bankruptcy
• Death of spouse or significant other
• Divorce or separation
In addition to the homeowner proving hardship, lenders require a specific set of supporting financial documents to consider a short sale. Contact ALM today and one of our specialists will help you get started.
As soon as you possibly can. Foreclosure situations tend to be extremely time sensitive. The sooner we can begin the negotiations with your lender, the greater the chances of a successful resolution. There is no need to wait until the lender sends you a notice of default or initiates formal foreclosure proceedings against you. Time is of the essence! Please contact us today for a free consultation with one of our specialists.
Absolutely nothing. Unlike other loss mitigation companies, ALM provides our services at no cost to the homeowner. Our fees are never paid by the homeowner, and we are only compensated if we successfully negotiate a short sale. Please contact us today for a free consultation with one of our specialists.
Every short sale situation is unique and follows its own timeline. Typically a short sale is completed within one to four months from the time we have a complete short sale package ready to present to the lender. Having said that, we have successfully negotiated a short sale in as little as two weeks. Timing depends on how quickly we can begin negotiating with your lender. If you are imminently facing foreclosure or even if an auction date has already been set, the process can certainly be expedited and we have even had lenders postpone the auction date. Please contact us today for a free consultation with one of our specialists so that we can be of immediate assistance to you.
Foreclosure can remain on your credit for up to seven years while a short sale usually gets reported as a”settled debt” and is significantly less damaging. With a short sale, your FICO score will not be as negatively impacted as it would be with a foreclosure, and you will be able to get into a new home much sooner as well.
ALM is not a credit counseling agency, but credit experts say that a foreclosure will typically reduce a borrower’s FICO score by 250 to 280 points and the borrower would usually need to wait more than 36 months before a lender will offer any kind of interest rate that makes sense. A short sale, on the other hand, will typically only result in an 80 to 100 point hit to the borrower’s credit and a significantly shorter waiting period before buying another home, usually about 18 months or less.
As with all foreclosures, there are several potential tax and liability considerations when doing a short sale. With a short sale, however, these potential tax and other liabilities are typically less frequent and less severe.
Tax ramifications: After completing the short sale your lender may decide to issue you a 1099 for the difference between the price your home sold for and what you owed, and you can later be taxed by the IRS on this amount as income.
It is important to note that if specific criteria are met, the IRS may release the borrower from this tax liability. Furthermore, Congress is currently considering legislation that would eliminate this taxation of so-called “income” due to cancellation of debt.
Lender recourse: In some states and with certain types of loans, lenders can pursue a court decision called a “deficiency judgment” making you personally liable for the remaining amount owed to them above the short sale price. In some cases, the lender may ask you to pay a portion of the difference back in the form of an IOU.
The lender has sole discretion whether to pursue a deficiency judgment in those instances when a deficiency judgment is permitted. Unlike other loss mitigation companies that offer “basic” and “premium” services, at ALM, as a matter of course, we diligently apply ourselves to every short sale case with the goal of negotiating with the lender to eliminate a deficiency judgment, minimize your tax liability, and to consider your debt as settled.
In most distressed mortgage situations, foreclosure is a last resort for all parties involved. Simply put, both the homeowner and the lender usually want to avoid foreclosure at all costs. That is why lenders have come up with various alternatives to foreclosure, which they are typically very motivated to pursue prior to going to foreclosure.
A short sale gives the lender the ability to cut its losses upfront thereby avoiding the expense and time of a foreclosure and potentially greater losses. Lenders want to make loans, they do not want to be in the business of owning and managing real estate. Whether the lender chooses to go through with a foreclosure or agree to a short sale, they are taking a loss either way, but in many cases they would take less of a loss with a short sale and resolve the matter in a comparatively shorter time frame. In nearly every case, a short sale offers a better return on the lender’s investment than a foreclosure does.
ALM works as independent third-party loss mitigators. It is because of our objectivity and neutrality that homeowners and their lenders can count on us to be an impartial driver of the loss mitigation process. ALM stands apart from the crowd because we strive to equally serve all parties to the transaction, and affect a win-win outcome for all.
We firmly believe that just as most borrowers use a professional to initially get into a mortgage, it is in their best interest to do so if they are in the unfortunate position that they need to get out of a mortgage. At best, you only get one shot to negotiate your way out of foreclosure, and while it is certainly possible to negotiate with the lender yourself, it is highly unadvisable.
Most lenders’ loss mitigation departments are understaffed, and the overworked loss mitigators are usually overloaded with all parties vying for their attention. Unfortunately, the loss mitigator can be very difficult to get a hold of, and when you finally do get through, you have very little time with which to make your case. Furthermore, the added stress of foreclosure in itself makes it difficult fore a homeowner to effectively and calmly negotiate their way out of foreclosure.
Because we work with all lenders and represent homeowners from all across the country, and since we specialize in loss mitigation, we understand how to collect, prepare, and effectively present the information that lenders require to seriously consider a loss mitigation solution such as a short sale. We have excellent working relationships with the lenders’ loss mitigation departments and we will leverage our network and expertise to help you solve your problem. Please contact us today for a free consultation with one of our specialists so that we can be of immediate assistance to you.
ALM has a national network of realtors who are well versed in the intricacies of valuing, listing, marketing, and selling short sale properties. Once we begin working with you we will assign a local affiliate realtor from our network to assist in quickly getting offer(s) on your property, so that we can negotiate a short sale with your lender. It is of vital importance that we work with a realtor that is capable of working in a distressed property situation so that we can effectively negotiate with your lender and secure a short sale agreement. If you have a preferred realtor that you would like to use, ALM can partner with them as well, provided they agree to conform to our standard realtor terms and conditions.
Investors often play a valuable role in a short sale, in that, in order to successfully complete a short sale an offer must be made on the property that the lender will accept as fair market value. An investor can step in as a buyer and be the crucial link to making the short sale possible. Unfortunately, there is no shortage of sharks and vulture investors on the prowl in the foreclosure arena looking to take advantage of distressed homeowners. Beware of these scammers!
These individuals and companies often market themselves as expert negotiators and loss mitigators when in reality they simply make “lowball” offers on the property that the lender will most likely not accept and that will waste precious time in a very time-sensitive situation, or worse, will lead to the lender foreclosing on you and repossessing your home. Even on the off-chance that the lender does accept their offer your potential tax liability can be much greater. By working with ALM you can be assured that you are protected from these unscrupulous investors. We will only have your property marketed to qualified, serious buyers who are prepared to make fair offers, including our network of pre-screened legitimate investors.
ALM can still help negotiate a short sale with your lender even if you file for bankruptcy protection. However, in our experience, bankruptcy is usually employed only as a last resort in a foreclosure situation. Typically, filing for bankruptcy only temporarily delays the foreclosure process (or in legal terminology, it provides a “stay”). Eventually the property is sold to satisfy debts to creditors. We strongly urge you to seek the advice of a bankruptcy attorney if you are considering this option.
Absolutely! ALM is experienced in negotiating all kinds of government loans, including FHA or VA owned mortgages and Fannie Mae / Freddie Mac insured mortgages, as well as privately insured mortgages. We are highly proficient in all of the specific rules and regulations governing the acceptable short payoffs of these mortgages.
Yes. Regardless of where you are located, we can help. We operate in every state and have a comprehensive understanding of all the ins-and-outs and rules and regulations applicable to each foreclosure situation.
ALM is a national leader in the field of short sale negotiating. Our principals and affiliates have decades of combined experience in all areas of the mortgage and real estate industries. Our expert loss mitigation specialists are highly trained and thoroughly knowledgeable in every aspect of this often complicated process. We operate in every state and have a comprehensive understanding of all the ins-and-outs and rules and regulations applicable to each foreclosure situation. Our expertise and experience is what differentiates us, our commitment to our clients is what sets us apart. It is this unique combination of industry-leading expertise, impeccable professionalism, and extraordinary customer focus that enables us to offer the highest level of service to our clients nationwide.
