Many borrowers are looking for solutions to prevent foreclosure. The banking system failure coupled with declining housing prices resulted in extreme economic turmoil. Millions of homeowners continue to struggle with making their mortgage payment and just as many owe more than their home is worth.

Numerous reasons exist to prevent foreclosure. The most urgent is no one wants to lose their home and end up living on the streets. Those fortunate enough to locate affordable housing after foreclosure usually end up paying more because of the effect against their credit rating. It can take as long as a decade to recover from the financial fallout.

Foreclosure prevents borrowers from obtaining another mortgage loan for at least two years. If approved, banks typically charge a higher interest rate because borrowers are now considered “high-risk.”

This label affects the cost of obtaining any type of loan and can increase the cost of home, health and automobile insurance premiums. Foreclosure can also impact your ability to obtain employment because many employers conduct background and credit checks.

Most homeowners become immobilized with fear when they realize they can no longer afford to make their mortgage payment. They hope they will find a solution, but oftentimes end up falling further behind in payments and spend countless nights worrying about how they can get caught up before the bank repossesses their home.

The moment borrowers realize they cannot make mortgage payments is the moment to contact their lender. By taking initiative to resolve the issue, borrowers send a message to lenders that they are serious about resolving the issue. Banks are usually more willing to work with borrowers who act responsibly.

Once a borrower becomes delinquent on their mortgage note by 31 days or more, the account is assigned to the bank’s loss mitigation department. A loss mitigator is assigned to handle the case and work with borrowers to establish a repayment plan.

The first line of defense is usually a loan modification. Some lenders require borrowers to cure mortgage arrearages before modifying the terms of their loan. Others will roll the delinquent amount to the end of the loan and extend repayment terms.

Each bank handles delinquent accounts according to established protocol. Debtors won’t know what options exist unless speaking with their lender. Loss mitigators do not make final decisions, but are instrumental in swaying lenders to offer assistance. When working with bank loss mitigators, it is crucial to be polite and responsive.

When borrowers do not qualify for loan modification or mortgage refinance, banks might offer the option of short selling. Obtaining short sale approval is no easy feat. Experts state nine of ten requests are denied. For this reason, it is best to work with an attorney or short sale specialist who possesses a strong working knowledge of the procedures involved.

Banks incur a loss on short sale real estate and require borrowers to prove financial distress. Borrowers are required to submit substantial financial documentation to prove they do not own assets which can be used toward repayment of their mortgage debt.

When borrowers obtain short sale approval, their property is listed with a realtor and must be sold within a specified timeframe. Occasionally, lenders will allow borrowers to list the property as “For Sale by Owner.”

One insider-secret for selling short sale real estate quickly is to locate private real estate investors. It is best to work with an investor with a solid track record in successful short sale transactions. Investors can be located by conducting research via the Internet or by attending local real estate networking meetings.

Author Bio: Real estate investor and author of Short Sale Hardship Letter eBook Course, Simon Volkov specializes in providing solutions to borrowers seeking to prevent foreclosure. His website presents an all-inclusive real estate article library covering foreclosure prevention options. Learn more at www.SimonVolkov.com.

Category: Real Estate
Keywords: prevent foreclosure, short sale, short sale approval, for sale by owner, real estate investors