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Strategies Regarding Negative Equity.

There was an interesting article in Sunday’s Review Journal about the Nevada foreclosure market and the mediation program . The link is provided below. While I agree that modification should be thought of more as an achievement than an entitlement, I do not propose that people should merely walk away from their homes as one suggested. There are various strategies to consider regarding disposition of the house or related mortgage.   We look forward to answering your questions should you like to respond with your thoughts.

A LONG WAY HOME: Getting a loan modification to avoid foreclosure not as easy as advertised – Business – ReviewJournal.com*

2 thoughts on “Strategies Regarding Negative Equity.

  1. Will a short sale hurt your credit? If so, are there any options to negotiate? Currently, what is the process if the bank doesn’t want to forgive the debt? Is that debt transferable to a third party and can that too be negotiated down if the debt we are talking about is less then $60K? What fees or other financial “stickiness” would apply?

  2. Thanks for your question, Barb.

    A short sale will be reported to the credit agencies as a negative event. However, the credit agencies have not publicly released information about how many points will be deducted from a borrower’s credit score. We believe that a Borrower may negotiate with a Lender about how the short sale will be reported to the credit agency and that such an agreement may be a part of the overall deal.

    If the bank does not choose to forgive the debt owed by the Borrower, they are not required to do so. They may follow up after the short sale and sue a Borrower for a deficiency action. There are various rules applicable to different types of loans as to how long they have to sue.

    Is the debt transferable? A note holder may transfer the debt to another third party and that third party may choose to negotiate down the debt. However, recall that no lender is required to negotiate down a debt secured by a valid note.

    Lenders charge various fees for short sales and loan modifications, similar to closing costs when one purchases a home or does a refinance.

    Please note that the above comments should be not be construed as legal advice. You should always consult with an attorney to determine the laws applicable to your specific situation.

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