One of the first questions almost any Sacramento short sale agent will ask a potential seller is: Have you applied for a loan modification? The reasons are many. First, it's probably been denied. Loan modification hell is ubiquitous. If denied, it's an easier process to move into the HAFA short sale program.
Second, banks will not accept a short sale file if a file for a loan modification is already open. If you're wondering why the bank has not verified receipt of your short sale package, it's probably because they won't open the short sale when a loan modification is open. You may have thought you closed the file, but it's not closed. For extra measure, you might want to request at least 3 times that the bank close out your failed loan modification.
Third, you can't do both programs at the same time. No can do. It's impossible. Bank will not process a short sale and a loan modification simultaneously. Choose one or the other. If you think that you might want to do a loan modification, please realize the following:
- You don't need a lawyer or an ouside service to help you to get a loan modification because you can do it yourself.
- You probably won't get it but you could be royally annoyed, irritated and totally stressed for a long period of time.
- There is a possibility that you may be granted a temporary loan modification, just to restore hope, and then the bank will eventually reject it and foreclose.
- Even if by some miracle the bank the grants a permanent loan modification, odds are the bank will not reduce the principal balance of your mortgage. So, it's a little like putting the gun to your head and not pulling the trigger for a while.
The time to think about a loan modification is NOT when you are in the middle of a Sacramento short sale. If you think you want a loan modification, apply for it first. When you are rejected, then apply for the short sale and tell your Sacramento short sale agent that you might have a loan modification open at the bank.
The main thing you need to know about a loan modification is you must have a job. You must have a permanent source of income. If you are unemployed, you will not get a loan modification. You may think, and quite rightly so, that the unemployed have a bigger need for a reduced monthly payment than those who are employed; however, think of it this way. The bank is essentially making a loan. Do banks make loans to people who don't have a job? You've gotta have a job to get a loan modification.
I received a call from an investor who bought a bank-owned home in Elk Grove a while back. He had questions about this home -- it was my previous short sale listing, which I had sold for around $250,000 after receiving 15 offers. In the middle of the short sale, the seller got a job. He then elected to attempt a loan modification, so we canceled the buyers and the short sale. I don't know what happened, but I do know the investor paid less than $200,000 for that home on the courthouse steps. The seller now has a foreclosure on his record for 7 years.
There is talk in Congress about eliminating the Home Affordable Modification Program (HAMP). It might not be around much longer anyway. If they eliminate HAMP, I shudder to think about what will happen to HAFA. If you want to do a loan modification, you can apply online at the link above.
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Certified HAFA Specialist
My Sacramento Real Estate Listings
Elizabeth Weintraub is an author, home buying columnist for The New York Times-owned About.com, a Land Park resident, and a Land Park real estate agent who specializes in older, classic homes in Land Park, Curtis Park, Midtown and East Sacramento. Weintraub is also a Sacramento Short Sale agent who lists and successfully sells short sales throughout the four-county Sacramento area. Call Elizabeth Weintraub at 916.233.6759. Put 35 years of real estate experience to work for you. Broker-Associate at Lyon Real Estate. DRE License # 00697006.
The Short Sale Savior, by Elizabeth Weintraub, available at Amazon.com.
Lyon Real Estate is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan.
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The views expressed herein are Weintraub's personal views and do not reflect the views of Lyon Real Estate.
Disclaimer: If this post contains a listing, information is deemed reliable as of the date it was written. After that date, the listing may be sold, listed by another brokerage, canceled, pending or taken temporarily off the market, and the price could change without notice. It could blow up, explode or vanish. To find out the present status of any listing, please go to elizabethweintraub.com.
