Avoiding Foreclosures in Palm Beach Gardens, Florida

by Rodney Forbes on November 2, 2012

West Palm Beach Short Sale RealtorFor homeowners who have a financial trial, any alternative to foreclosure is gladly received. Nevertheless, deciding on your suited alternative can be challenging. There are many factors that can affect a homeowner’s decision: their short term financial circumstance, their long term income prospects, their assets, interest rates, the interest rates, the internal policies of their property, even ethical and moral values may come into practice.

To make matters even more crucial, a great deal of the advice on foreclosure alternatives are from self-interested parties with a “dog in the race”, so to speak. These people could be lenders who profit off of loan modifications, 3rd parties that charge homeowners fees for guidance through strategic default, and individuals that claim themselves as specialists in short sales or foreclosure avoidance, when the truth is that they may have little experience or training on the subject matter.

With many various factors to consider and so much conflicting information out there while having to initiate such a critical decision, how is it possible for a homeowner to recover from a foreclosure and choose the best foreclosure alternative for their situation? Here below, we examine the ups and downs of a few of the major alternatives to foreclosure.
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Short Sale

When a foreclosure is a possible disaster that is on your plate, a short sale is a wise choice because the homeowner receives the approval from the lender to sell their home for beneath the value of their debt. In some states, non-recourse laws prevent the lender from legally pursuing a judgment against the borrower for the debt remaining after the secured properly is purchased, meaning the homeowner in Palm Beach Gardens, Florida is excused. In those states without non-recourse laws, the homeowner may clarify a short sale with the assistance of a short sale specialist and negotiate a written agreement from their lending institution, forfeiting their right to sue for the deficiency( the remaining debt owed by the homeowner after the home is sold). In return, the lender receives the proceeds of the sale on the home without the legal and administrative costs associated with foreclosure process.

West Palm Beach Short Sale RealtorThe drawback to a short sale is that if you are living in a recourse state and you still have significant assets, you will most likely still be held accountable for the deficiency when the home sells for less than the value of the outstanding debt. In addition, there are few Realtors in Palm Beach Gardens with the necessary experience to maintain the complexities of a short sale. The homeowner must be very diligent in screening Realtors in experienced short sale specialist, a short sale may permit the homeowner to salvage their credit, have their debt forgiven, and also avoid the public humiliation and spectacle of a foreclosure.

Loan Modifications

Loan modifications are frequently acclaimed as a technique to refraining from foreclosure. Homeowners dealing with potential foreclosure are often recommended to contact their lenders and work out a loan modification, where the lender alters the terms of the mortgage in order to help the homeowner in Palm Beach Gardens remain in their home. As for the lender, it can be reasonable to accept smaller payments over a longer amortization period, temporarily freezing interest rates, or delayed payment rather than accept the losses they would face with a foreclosure, particularly where the property value of the home has severely declined.

While loan modification programs may be profitable for the lender, for most distressed homeowners, loan modifications are a short solution that benefit the lender as opposed to the homeowner. If the property value of the borrower’s home has decreased to a point where it is significantly inferior than the value of the mortgage, the homeowner in Palm Beach Gardens will still be making Realtor mortgage payments for a home worth significantly reduced income, the it is not likely that they will capable of continuing to make mortgage payments in the long run. In this manner, a loan modification may only prolong the inevitable.

West Palm Beach Short Sale RealtorOn the other hand, loan modifications may be suitable in other circumstances where the reason bring for the homeowners financial distress is a short term one, in difference to the long term financial problems that come with sharply declining property values and significantly reduced income.

Deed In Lieu of Foreclosure

There is one more foreclosure alternative to remember, the deed in lieu of foreclosure. A deed in lieu of foreclosure is similar in concept to a short sale, except on behalf of selling the home, you hard back the home to the lender and in exchange, the foreclosure proceedings. Like with a short sale, it is critical to negotiate a forgiveness of the deficiency after the bank receives the deed.

The in convenient part to a deed in lieu of foreclosure is that it can be rather challenging to get the lender to admit a deed in lieu. It is significantly easier to get a lender to agree to a short sale. As a matter of fact, many lenders will require you to put your home on the market for a certain time frame before they will take into consideration a deed in lieu of foreclosure. With a short sale you come to the lender with an offer and a buyer ready to pay, while a deed in lieu of foreclosure you’re asking the lender to accept the deed to the property.

Which Foreclosure Alternative Is Right For You?

Even having data regarding ways for to prevent foreclosure and choose a preferable alternative to foreclosure, it can be confusing to know which option suites best for your specific case.

Typically speaking, a loan modification is the best solution when the reason for the missed mortgage payments of financial hardship is simply a short term cash flow issue. This could possibly be medical emergencies, sudden major repairs to the property, a car accident, or another long term financial crisis. Unluckily for the majority of homeowners, the cause of their agony isn’t a short term cash flow problem. If the root of the predicament is due to a significantly reduced income or a sudden decline in property values in Palm Beach Gardens, then a loan modification will typically be inadequate as a long term solution. In fact, it may be a higher cost for the homeowner in the long run, as they battle with keeping up loan payments, only to inevitably end up back where they started seeking other options to foreclosure.

West Palm Beach Short Sale RealtorThe deed in lieu of foreclosure provides multiple benefits over loan modification. It enables the homeowner to get a potential fresh start while avoiding many of the psychological and financial consequences of a foreclosure. However, it can be challenge to obtain a deed in lieu as lenders typically would prefer cash over the deed. This leaves the short sale as the most sufficient alternative to foreclosure where the cause of the homeowner’s financial hardship is because of unemployment, significantly reduced income, or where the value of the property in Palm Beach Gardens has dropped significantly. As previously mentioned, if you decide to take advantage of a short sale as an alternative to foreclosure, it is extremely important to find an experienced short sale Realtor who can manage the complexities of a short sale transaction. But with the proper representation, a short sale could be the alternative to foreclosure you’re seeking after.

**Rodney Forbes is a Realtor® and registered broker with Forbes Realty of South Florida, based in West Palm Beach Florida. Rodney and his team work in Palm Beach, Broward, Martin and St. Lucie Counties. As a recognized expert on short sales, Rodney has been featured on radio and national web conferences for agents. Rodney has also authored the book “Should I Short Sale My Home?”

Forbes Realty of South Florida also specializes in REO asset disposition. Rodney works with several banks and asset managers in the Palm Beach County area. Rodney is the main author for the popular real estate blog South Florida Real Estate Report. You can find a wealth of information regarding bank foreclosures, short sales, real estate news and local real estate trends.

For more information, please call Rodney at 561-337-4810 or email Rodney@ForbesRealtyOnline.com

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