Let’s face it…this can often be an uncomfortable topic for some people because facing a foreclosure is never something anybody plans on happening to them. A part of the American dream is to own your own home and when we finally get to that point, we don’t ever want anything like a foreclosure to happen to us. Unfortunately life can throw us a curve ball from time to time that can force us into difficult situations and in some cases, foreclosure may on one of those difficult situations.
If you are facing foreclosure, you are not alone! In January of 2015 there we over 500,000 homes nationally in some stage of foreclosure. While this number has been on the decline in recent years, that trend could very well pick back up again. The important thing here is if you are looking at a foreclosure, don’t “stick your head in the sand” like our feathered friend from above and take action so you don’t do severe damage to your credit which could take years to unwind.
What are my options? The good news is the Federal Reserve has taken unprecedented steps to prop up the economy from the economic fallout of 2008-2009. This has allowed real estate prices to rebound so many of these properties that were once “under water”, i.e. owing more than the value of the property, may now have equity in them that should enable many of these people to not only sell their property and payoff their mortgages, but also may be able to walk with some money in their pocket.
What if still owe more than the property is worth? In this case, you may need to consider doing a short sale on the property. Short sales became very popular back during the economic downturn when the economy took a turn for the worse and many people were stuck in a home owing more than it was actually worth. While short sales are more challenging, they CAN WORK! I will try to give a brief synopsis of how they work here, but realize there are many variables involved and you should consult with a real estate specialist to review your specific situation. In simplistic form, in a short sale you are essentially working out a deal with the lender to accept less that what is owed on the property in order for the sale of the property to take place. In some situations the lender may forgive the remaining debt, in some cases they will not and you would still be responsible for the unpaid portion. There is obviously much more to consider here, but hopefully this will give you a Birdseye view of how it works and may be an option if you owe more than the property is worth.
In either situation, you are getting out of a home that is no longer affordable to you and will hopefully prevent serious damage being done to your credit by avoiding a foreclosure all together!
In Colorado, the process is started with a NED filing (Notice of Election and Demand). Once that clock starts, the person(s) owing the debt can have anywhere from 110-125 days until the auction date to work with the debt holder and make arrangements to avoiding an auction all together. You would think this would be ample time to work something out between the borrower and the lender, but guess what? Most people in this situation simply choose to ignore this and “stick their head in the sand”. It is critical that you use this time to remedy your situation, because if you wait until the last minute you will likely be screwed and then your options will really be limited. Real estate laws can change from state to state, so make sure you consult with a professional who is up to speed on this process in your particular State and not only can you get out of a potentially bad situation, but also help prevent serious damage being done to your credit which could have even worse implications down the road.
We specialize in foreclosure properties in Colorado, so if you are facing this situation and are looking for someone to help you out, please consider using us as a resource as you’ll have a dedicated professional working hard for you!