Terminology:

PRE-FORECLOSURE - The period beginning with initial mortgage default up to when the distressed property is sold.  The length of what is considered pre-foreclosure varies, depending on state laws.

NOD - Short for Notice Of Default (NOD), this is an official notice from the lender that the borrower has defaulted on the mortgage.  The NOD formally begins the foreclosure process.  The NOD also outlines the reinstatement period.

REINSTATEMENT PERIOD - The time stipulated in the NOD in which the borrower may reinstate the loan - making required payments and bringing one's account into good standing.

SHORT SALE - A situation in which the seller (1) owes more money on the loan than the sale of the property will likely produce on the market and (2) is unable or unwilling to bring money to closing.  The seller may or may not be in pre-foreclosure.

NOTICE OF SALE - If, after receiving the notice of default, the borrower does not or is unable to reinstate the loan, a notice of sale is recorded.  The notice of sale explains when and where the foreclosure sale will be held.

FORECLOSURE SALE - Also known as the sheriff's auction, sheriff's sale or trustee's sale, this is when the property is auctioned to the highest bidder.

REDEMPTION PERIOD - The time that a distressed owner has the right to redeem the real estate after the foreclosure sale.  Redemption typically requires that the owner pay the sales price, interest, and other costs.  NOTE: Not all states provide for redemption periods.

REO - Acronym for Real Estate Owned, REO is the status of the property when the foreclosure sale is not successful and when ownership of the property is transferred voluntarily to the lender.

Texas is a non-judicial foreclosure state and there is no right of redemption.

CLICK HERE TO VISIT THE HUD FORECLOSURE HELP SITE!

Options For Distressed Homeowners:

• Refinance
• Sell and Bring Cash to Closing
• Lender Workout
• Short Sale
• Deed in Lieu of Foreclosure
• Foreclosure
• Do Nothing and Walk Away

• Home is Owner Occupied
• Home is 1-4 Units
• Mortgage is Owned or Backed by Fannie Mae or Freddie Mac
• Loan to Value (LTV) ratio is above 80% but not more than 125%
• Current on Existing Mortgage Payments
• Has enough Income to Support New Mortgage Payments

Mortgage Workout Options Terminology:

FORBEARANCE - Lenders may let you make a partial payment, or skip payments, if you have a reasonable plan to catch up.  Tell your lender if you expect a tax refund, a bonus or a new job.

REINSTATEMENT - Reinstatement refers to making a payment that covers all your late payments, usually at the end of a forbearance period.

REPAYMENT PLAN - If you can't afford reinstatement, but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.

LOAN MODIFICATION - Your lender may agree to amend your mortgage to help you avoid foreclosure.  The options include:

**Adding all missed payments to the loan amount and increasing the monthly payment to cover the larger loan.

**Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.

**Switching from an adjustable rate mortgage (ARM) to a fixed rate mortgage, so you aren't exposed to increases in your monthly payment.

**Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.

SIGN OVER THE PROPERTY TO THE LENDER IN EXCHANGE FOR DEBT FORGIVENESS - This can hurt your credit, but is better than having a foreclosure in your credit history.  This depends on the lender.

Why Short Sales are Preferable to Foreclosure:

Short Sales are considered preferable to Foreclosures because Short Sales (1) Lessen the impact a foreclosure can have on the surrounding community and (2) Won't damage the distressed owner's credit as much as a foreclosure.

What is a Hardship?

Not every distressed homeowner is a Short Sale candidate and, unfortunately, not every owner can be saved from Foreclosure.  Many panicked homeowners seeking a Short Sale solution may be unclear on what constitutes a valid Hardship - an event or events that change a homeowner's ability to keep current in mortgage payments.  LOSS of EQUITY is NOT considered a Hardship.  Lenders may consider Short Sales for homeowners who have experienced:

• Job Loss
• Business Failure
• Illness and Medical Costs
• Divorce or Death of a Spouse
• Natural Disasters

• Loss Mitigation
• Work Out
• Asset Recovery
• Loan Modification
• Loan Reinstatement
• Pre-Foreclosure

The Short Sale Package:

If you have multiple loans on the property, a package will need to be completed for each lender.

• Short Sale Proposal Letter (cover letter, no more than one page)
• Seller's Signed Short Sale Payoff Application, if available
• Seller's Hardship Letter
• Seller's Financial Information
• Supporting Hardship Information
• Repair Estimates for Property, if Necessary
• CMA with Supporting Sales History/Tax Roll Information
• Marketing History, Showings, and Feedback
• Purchase Contract signed by Buyer and Seller
• Written Proof of Buyer's Ability to Purchase the Property
• Copy of Certified Escrow Instructions, if Applicable
• HUD-1 Settlement Statement
• Preliminary Title Report, if Applicable

Each office is independently owned and operated.