Short sale agreement
Upon completion of a short sale agreement, it is of highest importance that your Realtor or legal council affirms that the short sale is done without recourse. If this is not negotiated, your bank can issue a deficiency judgment, collection efforts, and a second negative entry on your credit as it seeks settlement for it's losses on your mortgage.
This letter is written by your lender and stands as a contractual agreement to accept a short sale on your property. This document provides details of an agreed-upon sales price as well as the amount of forgiven debt or remaining liabilities.
Chapter 7 Bankruptcy
Known as a straight bankruptcy, this is a liquidation proceeding where you surrender all non-exempt property to a bankruptcy trustee for those assets to be turned into cash for your creditors. Within about four months, the debts are discharged but the bankruptcy will stay on your credit report for 10 years.
Chapter 13 Bankruptcy
Known as a reorganization bankruptcy this is an option if you are able to pay off your debts over the course of three to five years. Your property can be retained as long as you hold a predictable income that can cover living expenses and debt payment. This bankruptcy will stay on your credit report for 10 years.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is the agreement of giving away your property to a lender because you cannot make payments any longer. The lender will then sell your property to recover it's losses on the balance you owe. This tactic requires extensive paperwork and is not recommended without proper legal representation.
FICO is the best-known credit scoring system used in America that pools together various financial factors. Based on the information in your credit report, creditors can gauge the risk level of lending to you. Your score will range from 300 to 850 (the higher the score, the lower the risk you are to the lender and the lower your interest rate).
This is a temporary postponement or reduction of a loan payment, granted by a lender, for a period of time until you can repay your overdue payments. This postponement will extend the negative impact of missed payments and damage your credit score over time.
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This is a situation in which a homeowner cannot make payments on his or her mortgage and a bank or other lender must seize and sell the property to cover missed payments. If you go into foreclosure, your credit will be severely damaged for seven years or longer.
Loan Modification ("Loan Mod")
Instead of selling your home, you can sometimes adjust the terms of your home mortgage. Many banks have structured criteria you must meet to be eligible. Contrary to information given by many advertisements, it is very difficult to get the banks to lower the principle of the loan. Such modifications are called Principle Reduction Loan Modifications. Generally, loan modification programs have been unsuccessful and many slip back into foreclosure within one year.
Mortgage Forgiveness Debt Relief Act (HR 3648)
If you owe a debt and your debtor cancels or forgives the debt, you may be taxed on the canceled debt as if it we're income. However, as of December 2007, this act was enacted and generally allows taxpayers to exclude this income on tax returns. This tax forgiveness is scheduled to end December 2012.
Notice of Default
This is the letter your lender sends once you are three months late on your mortgage payment - informing that the foreclosure proceedings have begun. Once this notice is sent, you typically have 90 days to decide on a beneficial solution before foreclosure.
Notice of Trustee Sale
A trustee sale is an auction open to the public where your foreclosed property is usually awarded to the highest bidder who meets predetermined criteria.
This is the vital time between the Notice of Default and the actual foreclosure (a span of approximately 90 days) when you can stop the foreclosure process by paying back payments, modifying the mortgage, or initiating a short sale.
When you see the term REO, it means real estate owned [by the bank]. After a home has gone through a foreclosure, the bank holds the rights and possession of the property on their own books. They will then find a listing agent to sell the house as quickly as possible. If you see a sign on a home for sale that reads bank owned, it is referring to an REO.
Also known as a short payment, this financial agreement occurs when the current market value of the home is less than what the seller owes on the mortgage. The bank will negotiate the details of a selling price and try to recuperate as much as it can from the defaulted mortgage by allowing the sale of the home to an interested buyer. In the hands of a qualified short sale real estate agent and under the right circumstances, you can be completely forgiven of debt and be well on your way to restoring your credit in about two years. Due to loan modifications being largely unsuccessful, short sales are usually the most desirable solution. Please consult a qualified short sale real estate broker to determine your eligibility.admin
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Posted in Investing Post Date 10/09/2015