Something that is recommended to everyone. A solid asset protection plan will reduce your liabilities and keep you and your other assets from harm while also allowing you to cut your losses and walk away in the event of unforseen crises, frivolous lawsuit or downward housing market.
Bankruptcy occurs when a person or business is unable to repay outstanding debts. In this legal process, the debtor is forgiven of outstanding debts and obligations.
Process in which the bank or lender accepts the title of the house as settlement for the debt.
The difference between the principal balance and the amount received, given the amount received is less than the amount owed.
After foreclosure, the bank or lender seeks to recover the outstanding balance that remains after the sale of the house. In addition to the foreclosure, these deficiency judgments negatively affect the seller’s credit report.
Homeowners are forgiven of the deficiency judgment.
Federally chartered entity that purchases qualifying mortgages. Fannie Mae is the largest source of mortgage funding in the US.
The homeowners have fallen behind in mortgage payments and, as a result, the bank or lender has seized the home.
Federally chartered entity that purchases qualifying mortgages.
Home Affordable Foreclosure Alternatives Program is designed for those unable to stay in their homes even with a loan modification. Homeowners are able to avoid foreclosure by either “short selling” their home or through the “deed-in-lieu of foreclosure” process. In order to be eligible for HAFA, the homeowner must meet the basic criteria for HAMP. Some criteria include:
A letter the seller sends to the bank in which he/she requests the bank considers a short sale to stop the foreclosure of the home. These letters can often make or break the short sale. The decision to allow for a short sale can be influenced with a sincere story of hardship.
An agreement by which a trustee holds ownership of real estate for the benefit of an individual or an entity. Land trusts are often used by nonprofit organizations for conservation purposes, by large corporations to amass significant landholdings, and by individuals to keep their names out of the public records as a form of asset protection.
Claims against a home that are made to secure payment of debt. When selling a property, it is unlikely that a property with a lien will close until the debt is settled as buyers seek a clean title.
Payment of the lien in full.
Loan Modification
Terms of the original mortgage are modified and agreed upon by both the lender and borrower. Loan modification occurs when the borrower is unable to meet the original terms or repay the loan. Modifications can include a change to interest rate, length of repayment is extended, or a different loan may be issued altogether.
Loan Servicer
An entity that reports and monitors loan payments. These companies also collect monthly payments and disperses property taxes and insurance payments.
Market value is the probable price for which a property will sell in its current condition in a competitive and open market.
Mortgage
Also known as “liens against property” or “claims on property”, a mortgage is used to purchase properties without paying the entire value upfront.
Mortgage Lender
Bank or other financial institution that lends homebuyers money to purchase property.
A short sale occurs when a property sells for less than the balance owned on the property’s loan. A short sale generally occurs when the borrower/homeowner cannot afford the mortgage on the property. In this case, the lender has decided to sell the property at a moderate loss in order to avoid a substantial loss that might be incurred due to a foreclosure.
Short Sale Approval Letter
A letter in which the bank gives approval for the short sale to go through and includes legal details about the terms and conditions of the sale and the resulting action on the seller (if any).