Colorado Springs Short Sale Agent

For Colorado Springs homeowners that are in a financial hardship, any substitute for a Colorado foreclosure is welcome, essentially. However, choosing the suited foreclosure alternative can be challenging. A large number of factors can be influential to a homeowner’s decision: their short term financial circumstance, their long term income prospects, their assets, interest rates, the internal policies of their lender, the present as well as future market value of their property, even ethical and moral values may come into practice.

To make matters complicated, a great deal of the advice on Colorado foreclosure alternatives comes from self-interested parties with a “dog in the race”, so to speak. These could be lenders who benefit from loan modification, 3rd parties that make homeowners pay fees for assistance through strategic default, and individuals naming themselves as experts in Colorado short sales or Colorado foreclosure avoidance, who in reality may have minimal experience or training on the subject matter.
With so many different aspects to acknowledge and so much conflicting information out there, and such a critical choice to be made, how can a homeowner abstain from a foreclosure and pick the best foreclosure alternative for their situation? Beneath here, we examine the pros and cons of a few of the major alternatives to foreclosure.

How to Avoid Colorado Foreclosures – Alternatives to Colorado Foreclosures

Colorado Springs Short Sale

When dealing with a foreclosure, a short sale is great because the homeowner receives approval from the lender to sell the home for less than the value of their debt. In some states, non-recourse laws prevent the lender from legally pursuing a judgment against the borrower for the debt remaining after the secured property is purchased, meaning the homeowner is excused. In those states without non-recourse laws, the homeowner may classify a short sale with the aid of a short sale specialist and negotiate a written agreement from their lending institution, abdicating their right to sue for the deficiency (the remaining debt owed by the homeowner after the home is sold). In return, the lender receives the proceeds from the sale of the home without the legal and administrative costs affiliated with the Colorado Springs foreclosure process.

The drawback to a Colorado Springs short sale is that if you are in a recourse state and you still have significant assets, you will most likely still be personally responsible for the deficiency when the home sells for less than the value of the outstanding debt. In addition, there are few Realtors with the experience mandatory to maintain the complexities of a short sale. The homeowner must be very persevering in screening Realtors in order to emerge from a short sale with a positive conclusion. However, with an experienced Colorado short sale specialist, a short sale may grant the homeowner the ability to salvage their credit, have their debt relieved, and also avoid the public humiliation and spectacle of a foreclosure.

Loan Modifications

Loan modifications are often acclaimed as a technique to refraining from foreclosures in Colorado Springs. Homeowners dealing with potential foreclosure are often recommended to contact their lenders and work out a loan modification, where the lender alters the terms of the mortgage in order to help the homeowner remain in their home. As for the lender, it can be reasonable to accept smaller payments over a longer amortization period, temporarily freezing interest rates, or delayed payment rather than accept the losses they would face with a foreclosure, particularly where the property value of the home has severely declined.

While loan modification programs may be favorable for the lender, for most aggrieved Colorado homeowners, loan modifications are a brief solution that profits the lender as opposed to the homeowner. If the property value of the borrower’s home has lowered to a point where it is significantly inferior to the value of the mortgage, the homeowner will still be making Realtor mortgage payments for a home worth significantly less than what they are paying, all the while incurring further debt. If the homeowner as well dealing with unemployment or a significantly reduced income, then it is not likely that they will have the ability to continue to make mortgage payments in the long run. Thus, a loan modification may only prolong the inevitable. On the other hand, loan modifications may be appropriate in other circumstances where the reason being for the Colorado homeowner’s financial distress is a short term one, as opposed to the long term financial problems that come with sharply declining property values and significantly reduced income.

Deed in lieu foreclosure

There is one more Colorado foreclosure alternative to bear in mind, the deed in lieu of foreclosure. A deed in lieu of foreclosure is alike in concept to a short sale, except on behalf of selling the home, you hand back the home to the lender and in exchange, the lender will terminate foreclosure proceedings or agree not to decree foreclosure proceedings. Like with a short sale, it is critical to negotiate a forgiveness of the deficiency if you are in a recourse state, or you could still be held responsible for the deficiency after the bank receives the deed.

The downside to a deed in lieu of foreclosure is that it can be rather difficult to get the lender to admit a deed in lieu. It is significantly easier to get a lender to agree to a Colorado Springs short sale. As a matter of fact, many lenders will ask that you put your home on the market for a certain time frame before they will take into consideration a deed in lieu of foreclosure. With a short sale, you come to the lender with an offer and a buyer ready to pay, while with a deed in lieu of foreclosure you’re making a request for the lender to accept the deed to the property.

Which Colorado Springs Foreclosure Alternative Is Right For You?

Even armed with information regarding ways you can block Colorado foreclosure and choose a preferable alternative to a Colorado foreclosure, it can be confusing to know which option suites you best for your particular case. Generally speaking, a loan modification is the best answer when the cause of the missed mortgage payments or financial difficulty is simply a short term cash flow problem. Perhaps this could be medical emergency, sudden major repairs to the property, a car accident, or another long term financial crisis. Unfortunately for most Colorado Springs homeowners, the reason for their distress is not a short term cash flow problem. If the root of the issue is because of a significantly reduced income or a sudden decline in property values, then a loan modification will generally be inadequate as a long term solution. In fact, it may cost the homeowner more in the long run, as they struggle to keep up with loan payments, only to inevitably end up back where they started seeking other options to a foreclosure.

The deed in lieu of foreclosure offers a number of benefits over loan modification. It allows the Colorado homeowner to potentially get a fresh start while avoiding many of the psychological and financial consequences of a foreclosure. However, it can be difficult to obtain a deed in lieu as lenders generally would prefer cash over the deed. This leaves the short sale as the best substitute to foreclosure where the cause of the homeowner’s financial distress is because of unemployment, significantly reduced income, or where the value of the property has dropped significantly. As previously mentioned, if your choice is to take advantage of a short sale as an alternative to foreclosure, it is extremely important to find an experienced Colorado Springs short sale Realtor who can manage the complexities of a Colorado short sale transaction. But with the proper representation, a short sale could be the alternative to a Colorado foreclosure that you’re looking for.

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Chuck is a Real Estate agent at RE/MAX Properties , covering the greater Colorado Springs area.
Phone: 719-231-5525
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Helping Colorado Springs home owners avoid foreclosure with a Colorado short sale. My name is Chuck Wartman and I specialize in short sales in Colorado Springs. I am your Colorado Springs Short Sale Specialist Realtor and Colorado Springs loan modification and distressed property expert. This article and content is for general informational purposes and may not be accurate. This should not be taken as legal advice, technical or tax advise under any circumstance. Seek legal advise and representation in all legal matters.