Kevin Jones SFR (Short Sales and Forclosure Resource) 
 Foreclosure and Short Sale Resource Guide
Homeowners and homebuyers in today’s real estate market face unique challenges. Of special concern are issues arising out of the possibility of foreclosure on their homes, and possible alternatives. While foreclosure occurrence in Alabama is relatively low compared to the rest of the country, the rate and number of foreclosures in the state have risen substantially.
This guide is to assist you in meeting the challenges of potential foreclosure. It includes general information about foreclosure and “short sales” as well as articles, publications, and useful links.
What is Foreclosure?
At the time of settlement, you signed paper work agreeing that the mortgage company has the right to take ownership of the property through a process called foreclosure if you stop paying your monthly mortgage payments.
When you miss mortgage payments, in some cases for as short a period as 45 days, you are considered in default on your mortgage. Mortgage lenders can move your loan into collections, which can be the start of the foreclosure process.
If you are having trouble keeping up with your mortgage payments or if you have received a letter from your lender asking you to contact them, don’t ignore it. Contact your lender immediately to try to work out your options.
Foreclosure Law
General information about the foreclosure process in Alabama can be found at:
Options in Foreclosure Situations
Call Your Lender!
(To get the right person, you may need to ask for the department that handles loss mitigation or workouts or asset recovery or home preservation and be persistent.)
1.       If Your Problem is Temporary, discuss:
·         Reinstatement: The lender agrees to accept the total amount owed to them in a lump sum by a specific date
·         Forbearance: The lender allows you to reduce or suspend payments for a short period of time after which another option must be agreed upon to bring your loan current. A forbearance option is often combined with a reinstatement, for example, when you know you will have enough money to bring the account current at a specific time in the future due to a hiring bonus, investment, insurance settlement, or a tax refund.
·         Repayment Plan: You may be able to get an agreement to resume making your regular monthly payments, in addition to a portion of the past due payments each month until you are caught up.
2.       If it appears that your situation is long term or will permanently affect your ability to bring your account current, discuss
·         Mortgage Modification: If you can make the payments on your loan, but you do not have enough money to bring your account current or you cannot afford the total amount of your current payment, your lender may be able to change one or more terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways: (i)adding the missed payments to the existing loan balance; (ii) changing the interest rate including making an adjustable rate into a fixed rate; (iii) Extending the number of years you have to repay.
·         Claim Advance: If your mortgage is insured you may qualify for an interest free loan from your mortgage guarantor to bring your account current. The repayment of this loan may be delayed for several years.
3.       If Keeping Your Home Is NOT an Option discuss:
·         Sale: If you can no longer afford your home, the lender will usually agree to give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to obtain the services of a real estate professional who can aggressively market the property.
·         Pre Foreclosure Sale or “Short Sale” : If the properties sales value is not enough to pay the loan in full, the lender must approve that they will accept less than the full amount owed. This option can also include a period of time to allow your real estate agent to market the property and find a qualified buyer. (Ask if there is monetary help available to pay other lien holders and/ or to help toward paying a few moving cost)
·         Assumption: A qualified buyer may be allowed to assume your mortgage, even if your original loan documents state that it is non assumable.
·         Deed in Lieu: The lender agrees to allow you to voluntarily “give back” your property and forgive the debt. Although this option sounds like the easiest way out for you, generally , you must attempt to sell your home for its fair market value for at least 90 days before the lender will consider this option. Also, this option may not be available if you have other liens such as judgments of other creditors, second mortgages, and IRS or State Tax Liens.
More about Short Sales
A short sale is an arrangement between the current owner of a home and the current mortgage lender holding the mortgage to accept an offer for less than the total amount owed to pay off the home loan (including other transaction related expenses such as closing costs, property taxes, transfer tax, and or commission fees.
The lender determines if the seller is eligible to sell the home at less than the outstanding debt due to a hardship and then the lender accepts that shortfall as their loss. Simply owing more than the home is worth is not considered a hardship. Hardships include divorce, unexpected hospitalization, job loss, death of a family member or similar catastrophic situation. Additionally a budget must show that the seller’s expenses exceed their income/assets, they are behind on their payments and there is no way to repay the lender.
The buyer of a property in a short sale should be aware of several key issues. The contract is usually contingent upon the agreement of the seller’s mortgage lender to accept the net proceeds of the sale as full payment for the underlying debt. This is often a long process, which can delay an anticipated closing date, and buyers and agents should be prepared for this possibility. Ideally the lender pre approved the short sale prior to advertising on an n MLS service, but the fact that the property is a short sale should be disclosed in the comments section of the listing. The sales contract should also include a third party addendum, outlining that the contract is contingent upon the sellers mortgagee to accept the net proceeds of the sale as full payment of the underlying outstanding debt.
As always, if you are considering a short sale, or any real estate transaction, whether you are a seller or a buyer, it is important to seek competent legal and financial professional advice. Be sure you deal with a real estate professional with experience on short sale transactions.
Foreclosure Help for Homeowners in Alabama
·         The Neighbor Works Center for Foreclosure Solutions was created to preserve homeownership in the face of rising foreclosure rates. It conducts public outreach campaigns to reach struggling homeowners with information about how to keep their homes. For more info go to
·         Hope Now is an alliance between counselors, mortgage companies, investors, and other mortgage market participants who want to reach and help distressed homeowners directly.
·         The US Dept of Housing and Urban Development(HUD) has created tips for avoiding foreclosure, which provides an index of broad information on foreclosure assistance at and a more detailed guide , “Help for homeowners facing the loss of their home” at
Be Alert for Foreclosure “RESCUE” Offers
Distressed homeowners are prime targets for advertisements that promise help and rescue from their financial woes. Homeowners who already are in default may make their situation even worse, sometimes signing over the deeds to their home as part of a foreclosure “rescue”.
A typical story involves a homeowner who behind on their mortgage is contacted by an individual or company that offers to “refinance” the house or buy it to rent back to the family, promising (verbally) that it can be repurchased at a later date. Unfortunately, in either instance, the desperate homeowner basically signs away the deed in a stack of paperwork without realizing it.
Please contact me if you are in need of a Real Estate Consultant who cares about you because discovering what is important to YOU is important to ME.  I sincerely hope the information in this document helps someone with today’s market challenges!
Thank You,                                                                                                                                                      
Kevin Jones

Keller Williams Realty                                     
Phone: 205-368-5014