Short Sales, Foreclosures & Loan Fraud
Due to the recent market correction, buyers can find homes at more affordable prices than at the height of the market. The foreclosure and short sale markets have also become more prevalent. Buyers interested in purchasing a short sale or foreclosed property are advised to work with a REALTOR® who will help in the step-by-step process.
A REALTOR® can aid in negotiating with a lender on a price to purchase the property. Be prepared to provide proof of income and produce financial documentation in the mortgage pre-approval process. Lending standards now require more time and documentation.
If your offer is accepted, there is a good chance the home will be sold "as is," which means home improvements become the buyers' responsibility. It is important to obtain a thorough home inspection to assess the condition of the property. Read about Andrea and Donald's successful purchase of a foreclosed home in Linden.
The U.S. Department of Housing and Urban Development (HUD) offers a program to finance the costs of rehabilitation and improvements made on the home. Rather than obtain separate mortgages to finance the purchase and rehabilitation of a home, the 203 (k) program offers buyers the opportunity to obtain a single mortgage from a Federal Housing Administration (FHA)-approved lender to finance the purchase and subsequent improvements that may need to be made to occupy the residence.
Facing Foreclosure?
If you are currently a mortgage holder and you are having difficulty making your payments, first consult your lender or loan officer to explore options other than foreclosure or selling your home through a short sale, such as forbearance or refinancing. There are loan modification programs and refinancing options being offered through the following organizations:
HOPE NOW – (888) 995-HOPE (4673) – a HUD-approved alliance that provides free foreclosure prevention assistance.
HOPE for Homeowners program, which allows distressed borrowers to refinance into affordable, government-back mortgages.
Contact a housing counselor in New Jersey.
If losing your home is in the foreseeable future, consider a short sale.
A short sale* is a transaction for the sale and purchase of real property where the purchase price is less than the amount required to pay off the liens on the real property, such as mortgages, judgments, taxes, homeowner or condominium association fees, assessments, as well as closing costs including but not limited to brokerage commissions, realty transfer fee, and attorney’s fees.
It is recommended that homeowners contact a knowledgeable REALTOR® to help navigate a short sale transaction and market the property to potential buyers. Look for a REALTOR® in your area.
Read more about the difference between a short sale and foreclosure.
Beware of foreclosure recovery scams, or fraudulent companies that target borrowers at risk for losing their home. Read the warning signs to protect yourself from becoming a victim. Only consult trustworthy resources from state and local government agencies aimed at helping you to avoid foreclosure.
Resources for Improving Credit & Avoiding Scams
Foreclosure Mediation from the N.J. Judiciary
Making Home Affordable from the U.S. Department of Treasury
Mortgage Tips from the Federal Reserve Board
HOPE NOW – (888) 995-HOPE (4673) – a HUD-approved alliance that provides free foreclosure prevention assistance.
How You Can Avoid Foreclosure and Keep Your Home, from HUD
HOPE for Homeowners program, which allows distressed borrowers to refinance into affordable, government-back mortgages.
Credit Repair: How to Help Yourself from the Federal Trade Commission
Foreclosure Resources from the Federal Reserve
My Money, My Home, My Future toolkit from HUD to help "get your financial house in order."
NJ Home Ownership Preservation Effort
Predatory Lending and Short Sale/Foreclosure resources for consumers from NJAR®
Brochures are also available from the U.S. Department of the Treasury (Consumer Tips for Avoiding Mortgage Modification Scams and Mortgage Rescue Scams) and the Office of Thrift Supervision (Foreclosure Rescue Scams/How to Avoid Becoming a Victim).
*Short sales can have serious legal, credit and tax implications. Navigating through these long and often-confusing transactions can be difficult. It is advised that you work with a knowledgeable REALTOR® and consult an attorney or tax professional with regard to potential short sales whenever possible.