The Massachusetts Short Sales Process

free ebook- 35 pages of options to foreclosure as well as short sale information.  "Should I Short Sale My Home"

Following are the options that most likely will be more beneficial than losing your home to a foreclosure.   Though some of the options do include losing your home the benefits by going those routes are far better than a foreclosure.  The benefits of any of these options are two fold:

• Credit damage is reduced
• Potential forgiveness of debt
• In some cases, you can stay in your home

Loan Forbearance-  When the mortgage holder temporarily reduces or suspends mortgage payments for a short period of time.  At the end of that period they will be looking for you to re-instate the loan or provide some sort of other solution. This is an option to consider when you know your situation is short term.  Maybe a short term layoff or short term medical condition.  All accrued interest and fees are still owed and usually will be tacked on at the end of the original loan.

Loan Modification- A loan modification is a negotiating process where the original loan agreement is restructured with either an interest rate reduction adding on to the loan term or a combination of both.  You do need to qualify for the loan modification from a hardship standpoint and a financial standpoint.  Many loan modifications are failing because people still do not qualify for the new loan payment.  In general the banks are looking for about a 41% debt to income ratio.  Meaning that your consumer debt plus your mortgage is no more than 41% of your gross income.

Bankruptcy- Sometimes bankruptcy can restructure your debt so you can now comfortably make the payments on your home.  What you need to look at is will the reduction in consumer debt be enough relief to pay the mortgage.  Its probably only worth looking at bankruptcy if your consumer debt is greater than $10,000.  Don't forget student loans can not be put into bankruptcy.  Also use this technique very judiciously.  Do not go into bankruptcy unless it will save your home.

Deed in Lieu of Foreclosure- When the seller signs over the deed to the mortgage holder.  A Deed in Lieu of can only be done when there is one lien holder and cannot be done if their are any other outstanding liens.  Much like a short sale the terms of the transaction needs to be negotiated to eliminate or red

Short Sale- A process where a home is marketed and a short payoff is negotiated with the lien or lien holders.  Many homeowners are in a situation where there is multiple lien holders and the debt needs to be negotiated simultaneously with each lien. Again the terms of the short sale payoff needs to be negotiated for the best possible terms to the homeowner.

Both a deed in lieu of foreclosure and a short sale need to have the terms negotiated with the bank.  The best  outcome is to have the debt forgiven with out the opportunity for the bank to go after a deficiency judgment.