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Tag Archives: foreclosure

Mortgages in Distress: How Fannie Mae and Freddie Mac Handles Short Sales and Foreclosures

foreclosure and short sales

If you have a mortgage, there’s a good chance that’s it’s passed through Fannie Mae or Freddie Mac. These two lending institutions are responsible for creating massive liquidity in the mortgage market. They’re also involved in foreclosures and short sales – something many homeowners are facing today. If you’re one of them, here’s what you need to know.  Short Sale A short sale is when you sell the home for less than what you owe on it. This is usually done when no other option, aside from foreclosure, is available. A short sale must be approved by the bank, since it is guaranteed to lose money on the deal. In some cases, the bank will enter into a cooperative short sale. In these instances, the bank works with you to sell the house, often gives you a cash incentive to remain there so that it can be sold, and sometimes even pays for relocation once you do sell it. Other times, the bank will stipulate that you must pay the deficiency, and a court grants the bank a deficiency judgment. This means that you must sign a promissory note for the remaining balance. These promissory notes can be interest-free, but ...

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What Happens Before and After Foreclosure?

Between 2008 and today, there have been over 3 million completed foreclosures in the United States. We can blame Wall Street, Sub Prime Lenders, the government, the price of tea in China, or fill in the blank with the group of the day.  While people do lose their homes for reasons beyond their control, like an illness or death, most people lost their homes for one reason. They took on more than they could afford with no equity to help them when prices dropped. Unfortunately, my family got to see what happens during and after a foreclosure when they had that experience a little over two years ago. Spending More Than You Make We have some very close family members who were making decent money back before the great recession. Like us back in the day, they spend just about everything they made on a variety of things they thought they needed or wanted. While their jobs were certainly tied to how well the economy was doing at the time, they never set anything aside for a rainy day. They also rolled several lines of credit into a big mortgage payment. They were making enough to afford, so why not? Rainy Days Turns out the ...

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