Ten years ago hardly anyone had heard of a short sale. Now, since the real estate bubble burst, “short sale” is almost a household word here in the Los Angeles area.
The current situation is the result of several converging factors.
First, when the bubble burst, homeowners who purchased when the market was rising or had reach its peak, lost value. That might not have mattered if two other factors hadn’t come into play at the same time:
- Adjustable rate mortgages reset, making mortgage payments double or triple
- The economy tanked and people lost jobs
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If you find yourself unable to keep up with monthly payments on your house because of these factors, you do have some choices. If you don’t mind moving, the short sale is a good choice, but what if you’d like to keep your house? Refinance: Some programs will allow you to refinance up to 125% of your home’s current value – and lower your payments via lower interest rates. The FHA Short Refinance program will reduce your first mortgage to 97.75% of current value. If you are fortunate enough to have a loan that belongs to Fannie Mae and meets the timing criteria, you may be able to refinance without having an appraisal at all! |
Reinstatement: If you’re in pre-foreclosure and have come into some extra money, you can reinstate your loan by paying the defaulted balance plus interest and late fees.
Loan Modification: Depending upon who owns your loan, you could be eligible for HARP, HAMP, FHA-HAMP, or the USDA’s Special Loan Servicing. If you are having trouble making making payments but are employed and can still qualify for a loan, it’s possible that your current lender will work with you to lower your rate, lower the principle owed or even both. It can’t hurt for you to call the number on your mortgage statement and ask.
Forbearance: Again depending upon who owns your loan, if you are unemployed you may be eligible for 12 months of forbearance. During this time, you’ll be required to pay from zero up to 31% of your income toward the payments, but the bank will not add late fees or penalties and cannot start foreclosure. The unpaid amounts will be added to your loan balance for later payment.
Here in California, you may also be eligible for assistance from “Keep Your Home California.” For details, call 888.954.KEEP.
Bankruptcy: In some cases, judges allow homeowners to keep their homes – sometimes even reducing the principal balance on investment and vacation property. Do consult a qualified real estate attorney before considering this option. Alot will depend on the type of bankruptcy. Sometimes you can forestall a foreclosure but not be able to keep your home indefinitely. In such a situation, a short sale could be your best course of action.
More Help May be on the Way…
Expanded HAMP programs will be go into effect June 1, 2012. So even if your lender has deemed you ineligible for assistance in the past, it would be wise to check back after the new guidelines are in place.
To learn who owns your mortgage loan, visit Making Home Affordable.
If you own a home in Silver Lake, Los Feliz, Hollywood Hills, Eagle Rock, Pasadena, or surrounding areas and you’ve decided that a short sale is the best option, or if you just need to discuss your options with a real estate professional, get in touch.
I’ll be glad to go over the specifics of your situation with you and help you determine your best course of action.
You can call me directly at 213-215-4758 – but hurry. Don’t wait until the bank makes the decision for you.
Jenny Durling
Broker Associate
LA Property Solutions
213-215-4758
Copyright © 2012 By Jenny Durling * What are the Alternatives to a Los Angeles Short Sale? *
There are several reasons why - the first being that Los Feliz agents with buyers who haven't yet found the perfect home are searching the listings, looking for new possibilities. When those agents see your new listing, they'll examine the photos and read the descriptions. They'll check your square footage and amenities. They'll consider your neighborhood. Then they'll weigh all those elements against the requirements of their buyers who are looking in your price range. If your home looks promising, they'll schedule a showing. As a result, a home for sale will often see the most activity in the first couple of weeks after it comes on the market. It's true that those first buyers may not be "the ones," but if your home makes a good impression on the local agents who show it, they'll be back with other buyers. On the other hand, if they believe it is over-priced, they'll avoid showing it. Agents don't want to waste their time. Next, both buyers and agents search within price ranges. Buyers who can pay up to $600,000 generally don't even look at homes priced at $675,000, nor do their agents. And buyers searching for higher priced homes may want more square footage, more amenities, or a different location. So while sellers may have the idea that they can price high and come down when there's an offer, chances are there won't be any offers. An overpriced house is simply being seen by the wrong buyers.
Now That You Have Seen Your House From a Buyer’s Perspective, Make a Plan
Replace missing and broken pavers. If you have space, you can all a row of bricks along the edge or plant bright season blooms along the edge to create interest and draw the eye towards the front door. Speaking of doors, a fresh coat of paint on just the front door can make a huge difference in the way your home appears. I have clients who have already told me the first thing they are going to do when they buy a house is paint the front door red! Red may not be your thing, but a bright or contrasting color will definitely add interest and is an inexpensive ‘fix’. Add a nice, new welcome mat and you are good to go.
Agreed, the backyard has nothing to do with curb appeal, but as long as your are working the garden you might as well put some energy in the backyard as well. In Southern California, most people think of the backyards as an extension of their living space. If you have the space and don’t already have one, plant a citrus tree. The Meyer Lemon is a favorite and they grow pretty quickly. I can’t imagine living in L.A. without a lemon tree- it’s almost a requirement! A small tree will grow pretty quickly and won’t cost a whole lot. It will definitely be worth the investment.
If you need to 
If you find yourself in the position of no longer being able to make the payments on your Los Angeles home, a short sale is now an even better option than foreclosure or bankruptcy than it already was. You can short sell your house and rest assured that once the sale is complete, you can close the books on those loans and never have to look over your shoulder. The new law ensures that once a lender has agreed to accept a short sale payoff on the property, ALL lien holders must consider the outstanding balance as paid in full.
If you are truly in a hardship position and cannot sell your home for as much or more than you currently owe, a short sale could be the right choice for you. If there is equity in your home or you have money in the bank, there are a few options that could allow you to stay in your property.
If you can no longer afford you home and want to avoid the negative effects of foreclosure you should determine if you qualify for 
If you are in the midst of financial issues and are having trouble paying your mortgage, a short sale is preferable to a foreclosure for a number a reasons. You may be feeling powerless and like everything is outside of your control. You can get some degree of control by working with an experienced Realtor and
allow you to buy another home much sooner than a foreclosure would. Fannie Mae requires a minimum of 2 years to re-establish credit after a short sale before allowing a new mortgage. However, if you meet specific criteria, you may be able to qualify for an FHA loan right away. FHA will loan to those who remained current in their mortgage and other installment debts throughout the short sale process, had a