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What is Mortgage Forbearance?

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Recently fur-lowed employee considering mortgage forbearance.

So what is mortgage forbearance?

Mortgage forbearance is when a lender or servicer allows a borrower to defer their payments to a later date. This deferment could be in the form of a suspension of payments or a reduction or payments for a limited time. The goal of the forbearance is to allow the borrower some reprieve while they restore their financial situation. For a list of FAQ answered by the Small Business Administration check out this 10 Page List of Questions on Forbearance Forgiveness Answered by the experts as of August 4, 2020!

What Mortgage Forbearance Is Not

What mortgage forbearance is not, is payment forgiveness. While in forbearance, the borrower will still be required to repay any missed or reduce payments.

Once a borrower has returned to their previous financial position they should notify their mortgage servicer and resume your payments. It is recommended that it be done as soon as possible as to not incur more future debt.

Different Mortgage Forbearance Programs

Mortgage forbearance programs may have different options depending on the loan servicer, loan investor, the loan guarantor or insurer, and the type of loan. Make sure that you completely understand the terms of repayment. Some loans may require a lump sum payment once your financial health has been restored. Others may work out a variety of payment arrangements.

Mortgage Forbearance and Your Your Mortgage Servicer

Your mortgage servicer is the company that you send your mortgage payments to. To apply for mortgage forbearance, you will need the name of your servicer, their phone number and your loan number.

You will need to call your loan servicer to make a request for mortgage forbearance. Your loan must be a government backed or insured loan to qualify for forbearance. However, some states and none government loans may have their own forbearance options.

Beware Of Scams

Mortgage forbearance scammer

If you’re facing Mortgage Forbearance it’s important to know what to look out for regarding potential mortgage relief scams. Remember your own intuition and instincts are typically accurate. If you feel uneasy about the assistance you are receiving there is probably a good reason. Scammers may try to do any of the following:

  • Charge large upfront fees for their services.
  • Make promises that may be difficult to keep.
  • Use fear tactics to scare you into using their services.
  • Ask you to sign over your property title.
  • Ask you to sign documents you don’t fully understand.
  • Suggest that you make payments to someone other than your loan servicer.
  • Advise you to stop making payments.
  • Promise you payments in return for your personal information or credit card information.

The Heavy Lifting

When facing potential Mortgage Forbearance it all starts with the borrower and the loan servicer. Once that conversation is complete the game plan should be established and mortgage relief can begin.

New FAQs Address PPP Loan Forgiveness Issues-8-4-20

If you have any questions reach out to Bill Byrd at 843-972-7670. Bill has been a licensed broker since 1986 and has helped many families and individuals over the years seeking mortgage relief.

The Author…

Bill Byrd is a Husband, Father, Realtor, Educator, Musician and Athlete. A licensed Realtor since 1986 who loves helping his clients grow their personal wealth through real estate! Having helped numerous families and individuals during the previous housing crisis you can feel comfortable that Bill’s experience and expertise is unparalleled in our market. More About Bill

Have A Question?

Contact Us at 843-972-7670

Can I Receive Mortgage Forbearance?

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Can I receive mortgage forbearance? Is mortgage forbearance available for my situation and how can I get it?

How to I apply for Forbearance?

The current coronavirus crisis has caused havoc in many peoples lives. Many people in the US through no fault of their own have fallen onto hard times. However, with the recent CARES Act our government has put in place some temporary measures to help those in need.

The CARES Act

The 2 Trillion Dollar CARES Act was signed into law in March of 2020. The Act was designed to put measures in place to help those in financial need due to the Covid-19 crisis. Under the CARES Act homeowners needing mortgage relief, may be able to seek and get assistance. Those that qualify, may be able to defer their mortgage payments for up to a year without penalties of fees.

Forbearance is not a forgiveness of debt. You will still own the money and have to pay it back!

Please understand, forbearance does not mean you can stop making your mortgage payments without consequence. And, it is also important to note, not all loans are covered and the relief may not kick in right away!

Seeking Forbearance – Where to Start

Contact Your Loan Servicer

Concerned Couple about Mortgage Forbearance

When seeking forbearance your first step will be to contact your loan servicer. Keep in mind that only federally backed Government Loans are covered. These would include loans owned, secured or guaranteed by a variety of government agencies. Agencies like Fannie Mae, Freddie Mac, HUD, VA and the Department of Agriculture.

When you contact your loan servicer they will know what entity is behind your mortgage. And they will be able to quickly tell you if your loan will qualify for forbearance under the CARES Act. However, according to the Consumer Financial Protection Bureau’s website, even if your loan is not covered your loan servicer or state may have other options!

Make sure you have your loan number handy when you call.

Have paper and pen to take good notes, and be patient. Wait times on hold could be long! These are not normal circumstances.

Important Questions To Ask Your Loan Servicer

  1. What are my options to stop or suspend my mortgage payments under the CARES Act?
  2. Are their other options such as a Loan Modification, Forbearance or Refinancing that could help me?
  3. Can you waive my late fees and penalties?
  4. How will this affect my credit?

Your Forbearance Agreement

Once you are offered forbearance you will have a new set of terms and guidelines affecting your mortgage. Make sure you understand the fine print and ask plenty of questions. You forbearance agreement will be deferring some or all of your payments for a set period of time. It’s important for you to fully understand this new agreement with your lender, or you may create a new problem down the line.

Other Options

When people encounter financial hardships, the solutions are typically not a one-size-fits-all! Over the years we have helped numerous folks that have encountered financial hardship in may different ways. Below is a list of some of the options that can work to help folks in a variety of situations.

While each of these options may not be the perfect solution for everyone, they are options none the less. Each will have a benefit and an a consequence that should be throughly investigated before moving forward. Protecting your financial future should be the goal. It took many people a long time to recover from the 2008 housing crisis and you’ll want to avoid that if at all possible.

If you have questions about your situation, call Bill Byrd at 843-972-7670. Since 1986 Bill has been helping folks navigate challenging situations in real estate. Bill has the resources and connections to make sure you receive the right guidance for any challenge you face in real estate.

The Author…

Bill Byrd is a Husband, Father, Realtor, Educator, Musician and Athlete. A licensed Realtor since 1986 who loves helping his clients grow their personal wealth through real estate! Having helped numerous families and individuals during the previous housing crisis you can feel comfortable that Bill’s experience and expertise is unparalleled in our market. More About Bill

Have A Question?

Contact Us at 843-972-7670

Buying A Short Sale In Charleston

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Discover why Buying A Short Sale is unlike a normal sale.

If your considering buying a short sale house, there are a few things to consider. The most important thing to understand is that buying a short sale is not a typical transaction. After the housing crisis fall out in the 2007-2012 era it seemed like all I was doing in real estate was selling foreclosures and short sales. So I can confidently speak with authority on this subject! As I often quote the Farmers Insurance commercial, “we know a thing or two, because we’ve seen a thing or two”!

So the biggest benefit of buying a short sale is that you have the potential of getting a great deal! Over the years we have sold short sale homes well under market values with buyers walking into substantial equity. However, the flip side to the gain, is you have to be flexible, understanding and most of all patient!

1 – When Buying A Short Sale – Know The Market

Whether you are buying a short sale or buying a home from an equity seller, knowing the market is the first place to start. Is the market strong or weak? Are homes selling fast or taking months on the market? What is the list price to sale price ratio for homes where your considering purchasing? Knowing these answers is the only way you are going to know whether or not a home is listed as a good deal! As Professional Realtors, as well as Short Sale Experts, we study homes and prices everyday. We can provide you with the numbers you need to understand any real estate market.

Also, you’ll want to make sure you get advice from the right sources. Unfortunately we see too many home buyers rely on advice from out of state or online sources. Keep in mind it’s important to consult with people that know our local market, contracts or customs. Each state has different laws and rules regarding how real estate transactions are handled. You’ll want to develop your own understanding of our market. This way your decisions will be based on local benchmarks and not experiences from another state. Therefore, our recommendations are to use your local resources and learn the market with our help and guidance. In the end you’ll be much more confident and well equipped to make great deal.

2 – When Buying A Short Sale – The Seller’s Mindset

Short Sale Sellers can be stressfully challenged.

The first thing to realize is you’ll need to understand what a short sale is, and the impact it has on the seller. Briefly, a short sale is necessary when due to some hardship, the seller can no longer afford to make their payments. And, the home is worth less than the amount owed on the loan. Thus the payoff will be “short” when the home is sold.

Here you have a distressed seller that most likely is not maintaining the home. Typically deferred maintenance is usually a given. Why would they fix their home before feeding their family! The other element here is the sellers mindset. They are typically not happy about their situation, maybe a little embarrassed, so you need to approach the situation with empathy. Compassion early on will always go a long way when it comes down to the end of the transaction if things get stressful. Which can happen with a short sale.

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3 – Understand When Buying A Short Sale “The Bank Calls The Shots”

When you are preparing to make your offer, understand that the bank calls the shots. The reason for this in the banks point of view, is that they are taking the hit and eating the difference between the amount owed and the sale price. So they are going to call the shots! But that’s okay, if your patient you may be rewarded with a great deal. But, you may have to put up with a little inconvenience along the way.

4 – Know Your Limitations When Buying A Short Sale

If you have to move in by a certain date, you probably should not attempt to buy a short sale.

The process of approving a short sale is unpredictable for a variety of reasons. Over the years we’ve discovered every bank and person processing a short sale has a different way of doing things. Basically you are dealing with a transaction where everyone has a different set of procedures they follow. And from one sale to the next we are dealing with new sets of guidelines we have no control over.

Knowing where you stand financially will allow you to make better decisions.

So if you go into this process needing to close on a certain date, you might want to think twice about buying a short sale. You may be very surprised that your demands to close on a specific date will not matter. The folks at the bank will only move as fast as they will move. You see the seller has no input either here because the seller is not paying for anything! The bank is paying the realtor commissions, the closing costs, sometimes (but infrequently, don’t expect them) repairs and all other fees.

What this means to you, you have an unattached party making the decisions on the selling side with nothing to gain. The guy or gal working on the file is still going to have a job if you walk away from the transaction! And since the seller is already asking to be bailed out, the seller has no influence on the bank either.

I Hear The “Yea Buts”

You can't always get your way when buying a short sale

Yes, I hear and have heard all of the “yea buts”! “If I walk away the bank will have more carrying costs”! True. “They’ll have to put it back on the market, maybe they will end up with less”! True. “It doesn’t make any since that they would do that”. True. “It’s a bad business decision”! True. And I’m sure you can come up with a few more reasons why a bank should respond to a buyers demands and threats of walking away. But the bottomline is you are not dealing with decision makers that have skin in the game! They don’t care about the deal and that’s the hard reality!

So, go into your purchase of a short sale knowing it’s going to be a ride! I’ve seen short sales approved in as little as 30 days, and one that took over a year. However the one that took a year was back in the early days of the housing crisis when the bank were still training people to process them. The problem then was not the process but the shear number of short sales in the pipeline at that time. It’s not like that now, however we have all know change happens, so who knows what tomorrow will bring!

A Recent Experience

The Actual Short Sale Sold by Waverly Byrd
Actual Short Sale Home Sold By Waverly Byrd

The last short sale we did was just a few months ago. Waverly Byrd on our team had a client that bought a short sale in North Charleston that took about 3.5 months to close. The contract was ratified on January 22, 2020, the short sale was approved on February 20, 2020 and closed on April 3, 2020. The processing of this sale was fairly quick because the seller had two previous contracts that fell apart. However, we had counseled our client well in the beginning, so they knew what to expect when buying a short sale. They were in this for the long haul and their efforts were rewarded!

We were told that in both cases the buyers walked away from those sales because they either were not, or could not be patient and wait for the short sale to be approved. So my conclusion is that the agents representing them didn’t have the experience or skills to advise them properly from the start. We’ve found is that when we help our clients understand what to expect, positive results will follow. Consequently, our client bought a nice brick home on a lake for $270,000 that comped out in the $350,000 range! Not bad! Patience was rewarded and Waverly helped our client get the deal that the others left behind!

If you’re not ready and willing to make or pay for repairs, you probably shouldn’t buy a short sale.

Not that all short sales are in bad shape but you should be ready for repairs just incase. You see, often short sales are sold “as is”. Meaning, it doesn’t matter what your home inspector tells you about the homes condition. In most cases the bank will not authorize money for repairs. So our best advice is to have some money set aside for a few improvements once you take possession. Keep in mind as I mentioned in the beginning of this article, sellers of short sales are typically not maintaining their homes.

5 – When Buying A Short Sale – Your Lender

When Buying A short Sale Over Inspect

The most important thing to know regarding your lender, is how they will handle any appraiser required repairs if they come up? Most lenders will not lend on a home that doesn’t meet certain condition guidelines established by their underwriters.

Let say the appraiser notices some typical deferred maintenance, like rotten wood siding and chipping paint on the home. The appraiser may require this to be corrected before they will give you the money to close! In most short sales, the seller has no money for such repairs. Then the bank, that’s eating the loan, may not authorize funds for such repairs! What do you do?

In this situation, it’s not advised that you spend your money to repair a house that you don’t own yet. And unless you have enough cash to buy the home without getting a loan, the deal could fall apart. In some cases there may be way’s to save transactions like this but not always. Keep in mind every situation is very different and having the right real estate professionals guide you is very important.

Pay Cash

So there are two ways to avoid this situation. One is to pay cash. Not everyone can do this, so what do you do? The best practice is to look closely at the condition of every home you consider purchasing. And with our guidance we can give you a good idea of whether or not a bank will lend on it. Sometimes you’ll just have to pass and move on no matter how good the deal looks. If you can’t get the money or don’t have the money, it make no sense to pursue a damaged home.

The Rehab Loan Solution

There are a few lenders out there that do rehab loans for homeowners and investors. We have access to several. What you will find though is that these type of loans come with a cost. Typically they will have higher interest rates, more upfront fees and many will have inspection fees. This is because this is what is considered a non-conforming loan and is seem as having a higher risk to the lender. In the past many of our clients have not gone this route due to the added expense.

Our recommendation is that you do your research ahead of time so you completely know the in’s and out’s of this type of loan product before you’re under contract. This will save you time and in the heat of the battle of buying a new home, time is precious.

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Conclusion

We'll even have your keys delivered

So in conclusion, when buying a short sale you can insure your success a couple of ways. First of all, hire the right real estate professional to help you. (We would like to apply for the job!) Have them help you do your homework on the market. Follow our 8 Steps to Buying a Home and follow the guidance of your agent. Lean on local professionals for advice, from Lenders to Home Inspectors and others. Lean on your agent. Your agent has a trusted network of professionals that service every type of need in a real estate transaction. And most of all be flexible, it will be your greatest asset!

Our team’s goal is that you have the most successful experience working with us that you rave about us to your friends and family! And when they need real estate service you refer them to us! This has been the cornerstone of my business since 1986!

If you are planning to buy or sell a home in Charleston, I can help! Call Bill Byrd at 843-972-7670 for a free, no obligation consultation.

The Author…

Bill Byrd is a Husband, Father, Realtor, Educator, Musician and Athlete. A licensed Realtor since 1986 who loves helping his clients grow their personal wealth through real estate! Having helped hundred’s of families and individuals during his career you can feel comfortable that Bill’s and his Team’s experience and expertise are unparalleled in our market. Plus, Bill’s a great guy and one heck of a guitar player! More About Bill

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What Is A Short Sale? – Discover The Process

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Short Sale Under Water

Recently I’ve had more people ask me the question, what is a short sale, than I have in a long time. What a change from the last few years of a strong market. However I shouldn’t be surprised because every experienced agent knows that the market cycles changes every 10-12 years. So if you look at the last turn of the market, we peaked between 2005-2008, bottomed in 2010-2012 and now it’s 2020. Maybe it’s time to go back down!

So What is a Short Sale?

A short sale takes place when a home seller sells their home, when they owe more than it’s worth. To happen, you first have to have a sales contract and the lender has to agree to allow a shortfall. The obvious first question is always, why would the lender agree to that? And the answer is simply. Lenders are not in the business of owning real estate and don’t want to take back properties. Plus, the foreclosure process depending on what state it’s in can be an expensive and take a long time. So for a successful short sale to take place, several things have to happen.

You Pay No Commission on a Short Sale!

Since you owe more than your home is worth, the bank pays the realtor fees!

Prep-Work

Having handled lots of short sales after the financial crisis, we’ve discover the key steps for short sale success. We handle the process of getting a short sale approved the same way an attorney preps for a case. In a short sale we consider the bank is the judge, and our client is the defendant. Our job is to prove to the bank two things. First, our client truly has a hardship and second, we have sold the home for the highest price possible. If we can accomplish these two things we are on our way to a successful closing.

Short Sale Homework

Don't get caught in a financial mouse trap. A Short Sale may be your solution.

In the beginning, consider the process of getting your short sale approved is like applying for a mortgage in reverse! Basically there is a lot of paperwork to be filled out and plenty of financial documents to submit. Very similar to getting a mortgage. But the difference here is that you’ll want to show the bank that you can no longer afford the mortgage. So what is important to the bank is that you have a legitimate hardship. And you income is now less than what is needed to cover your bills. Typically approved hardships that we’ve seen approved have been: job relocation, loss of job, military transfer, death of a spouse. This doesn’t mean that these are the only types of hardships that can be approved. These are simply the ones that we’ve seen the most.

Getting It Done

So hopefully this post has given you you a basic idea of what’s needed to approach selling a home as a short sale. As always professional guidance is critically important. Since we’ve been handling of short sales for many years, this process is not new to us! Getting our feet wet with short sales after the financial crisis in 2008 we’ve learned a lot along the way. This experience is a benefit to anyone in Charleston considering a short sale.

Obviously there is much more to a short sale. To get started we would meet with you for a brief consultation to discuss your unique situation. Then if we both feel like we are compatible and want to move forward working together, we can start the process.

So if you or anyone you know is considering selling a home as a short sale or buying a short sale, give us a call 843-972-7670 we will be happy to help. Or you can fill out the form below and we will reach back out to you. We are your Charleston Short Sale Experts!

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The Author…

Bill Byrd is a Husband, Father, Realtor, Educator, Musician and Athlete. A licensed Realtor since 1986 who loves helping his clients grow their personal wealth through real estate! Having helped numerous families and individuals during the previous housing crisis you can feel comfortable that Bill’s experience and expertise is unparalleled in our market. More About Bill

Contact Us at 843-972-7670

1180 Sam Rittenberg Blvd Ste. 300 / Charleston, SC 29407 / 843-790-7000