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**Facing Foreclosure? You Have Options**

In today’s challenging times, many homeowners are faced with difficult decisions about their homes. If you’re struggling to make mortgage payments, foreclosure might seem like the only solution—but it’s important to know that there are other paths available that may better protect your future.

Foreclosure can have long-lasting impacts on your credit and financial well-being. Here's what you should know:

1. **Credit Impact**: A foreclosure can cause a significant drop in your credit score—sometimes by over 300 points—which may affect your ability to secure future loans.

2. **Lasting Effect on Credit Report**: Once listed, a foreclosure can be challenging to remove from your credit report, remaining as a long-term mark on your financial history.

3. **Security Clearance**: For those with jobs requiring security clearance, a foreclosure can have potential consequences.

4. **Financial Responsibility**: In some cases, lenders may pursue a deficiency judgment to recover the balance after the sale of the property.

5. **Relocation**: Foreclosure often means relocating, which can impact your family, career, and daily life.

However, it’s essential to explore alternatives like short sales or loan modifications, which can provide more manageable solutions and help you avoid the full impact of foreclosure.

If you're a homeowner who needs to sell but owes more on your home than its current value, a short sale can be an excellent solution. With no out-of-pocket expenses, this option is becoming increasingly attractive for many homeowners. While banks and lenders were once reluctant to approve short sales, market changes have made them far more open to negotiations. Recent shifts in corporate policies and government regulations have also improved the likelihood of getting short sales approved.

**What Is a Short Sale?**

Simply put, a short sale happens when a homeowner owes more on their mortgage than the home's market value. In a short sale, the lender agrees to accept less than the full balance of the mortgage at closing, allowing the property to be sold for less than the total owed.

**Qualifying for a Short Sale**

Homeowners typically need to meet one or more of the following conditions to qualify:

- **Financial Hardship**: You’re facing financial difficulties that make it hard to afford your mortgage payments.

- **Monthly Income Shortfall**: Your income doesn’t cover your monthly expenses, meaning you can't or soon won’t be able to afford your mortgage.

- **Insolvency**: You don’t have enough liquid assets to pay off your mortgage.

While this may seem straightforward, the process can be complex. Our team has completed hundreds of short sale and default transactions, and we’re here to put our expertise to work for you. Best of all, there’s no out-of-pocket cost for our service.

**Why Consider a Short Sale?**

- **Reduce or Eliminate Your Mortgage Debt**: Free yourself from overwhelming mortgage payments.

- **Avoid the Negative Impact of Foreclosure**: A short sale is less damaging to your credit than a foreclosure.

- **Potential Relocation Assistance**: You may be eligible for relocation assistance, ranging from $1,500 to $15,000, depending on the lender and circumstances.

- **Repair Your Credit Sooner**: Begin rebuilding your credit more quickly than if you go through foreclosure.

- **Future Homeownership Opportunities**: You may be eligible for a Fannie Mae mortgage to purchase a new home in as little as two years, compared to up to seven years after foreclosure.

If you think you may qualify for a short sale or have questions, don’t hesitate to reach out for a free consultation. Understanding your options now could make all the difference for your future.

A loan modification is an agreement between you and your mortgage company to change the terms of your mortgage to make your payments more affordable. This could involve adjusting the payment amount, extending the length of your loan, or changing the interest rate. The goal is to lower your monthly payment so you can keep up with your mortgage.

A Loan Modification Might Be Right for You If:

• You’re not eligible to refinance your loan.
• You’re facing long-term financial hardship.
• You’re behind on your mortgage payments or likely to fall behind soon.

How Does a Loan Modification Work?

A loan modification typically includes one or more of the following changes:

• Changing the loan type: For example, switching from an Adjustable-Rate Mortgage (ARM) to a Fixed-Rate Mortgage for more predictable payments.
• Extending the loan term: Extending the loan from, say, 30 years to 40 years to lower the monthly payments.
• Reducing the interest rate: This can be either a temporary or permanent reduction to help lower your payments.
• Adding past-due amounts to the loan balance: Any missed payments, interest, or escrow amounts may be added to the unpaid principal balance and spread out over the new loan term.

How to Get Started

To begin the process, here’s what you’ll need:

• Financial Information: Gather your mortgage statements, details about any second mortgages, other monthly debt payments (like car loans or credit cards), and your income details (such as paystubs and tax returns).
• Explain Your Situation: Be prepared to explain your financial hardship—why you’re struggling to make payments, and whether it’s a short-term or long-term issue. This helps your mortgage company find the right solution for you.
• Contact Your Mortgage Company: Let them know you’re interested in a loan modification and ask if you qualify.

For further assistance, you can reach out to us, or connect with a qualified housing counselor through the Making Home Affordable program.

Contact us today to get started!

In Arizona, the foreclosure process primarily follows a non-judicial process, meaning it does not go through the court system unless there are special circumstances. Here's a step-by-step breakdown of the foreclosure process in Arizona:

• The foreclosure process begins when a borrower misses mortgage payments (usually after 90 days of non-payment).
• The lender (or loan servicer) will attempt to contact the borrower about repayment options, late fees, or loan modification possibilities.

• If payments are not made, the lender files a Notice of Trustee’s Sale with the County Recorder’s Office.
• This notice must be recorded at least 90 days before the sale date and includes: 
  • Property Description
  • Amount owed
  • Trustee's contact information
• The lender must also notify the borrower and post a public notice.

• The borrower has the right to bring the loan current by paying past-due amounts, plus fees and costs, before the sale date.
• In some cases, the lender may allow a loan modification or a short sale instead of foreclosure.

• If the loan is not reinstated, the property is auctioned to the highest bidder at a public sale.
• The auction is conducted by the trustee (a neutral third party managing the foreclosure process).
• The winning bidder must pay in full (usually in cash or cashier’s check) on the day of the sale.

• If no one bids at auction, the property becomes Real Estate Owned (REO) by the lender.
• If the former homeowner does not vacate, the lender can file for eviction.
• Arizona does not have a statutory redemption period after a non-judicial foreclosure, meaning the borrower cannot reclaim the property once the auction is complete.

• Arizona has anti-deficiency laws that protect homeowners in certain cases (e.g., single-family homes under 2.5 acres with purchase-money loans).
• If the borrower is not protected, the lender may sue for the remaining loan balance after foreclosure.

✅ Arizona primarily follows a non-judicial foreclosure process, meaning no court involvement.
✅ The foreclosure timeline is relatively fast (as little as 90 days after the notice is filed).
✅ The borrower can reinstate the loan anytime before the auction.
✅ There is no right of redemption after foreclosure.
✅ Arizona has anti-deficiency protections in some cases, preventing lenders from suing for unpaid debt.

If you're facing foreclosure in Arizona or advising someone who is, there are several foreclosure alternatives that can help avoid losing the home through a trustee's sale. 

Here are the main options:

• Before the foreclosure sale, the borrower has the right to bring the loan current by paying the past-due amount plus fees.
• This is typically available up until 5 days before the sale date in Arizona.

✅ Best For: Homeowners who had a temporary financial hardship but can now afford to make payments.

• The lender may allow the borrower to modify the loan terms to make payments more manageable.
• Modifications may include: 
  • Lowering the interest rate
  • Extending the loan term
  • Adding missed payments to the loan balance

✅ Best For: Borrowers who can afford a reduced payment but need help restructuring the loan.

• The lender agrees to temporarily reduce or suspend mortgage payments for a set period.
• Once the forbearance period ends, the borrower must resume payments and may need to repay the missed amounts.

✅ Best For: Short-term financial hardships (job loss, medical emergency) where income recovery is expected soon.

• The borrower works with the lender to gradually catch up on missed payments over time.
• The lender spreads out past-due payments over several months while the borrower continues making regular mortgage payments.

✅ Best For: Homeowners who can afford extra payments to catch up on past-due amounts.

• The homeowner sells the property for less than the mortgage balance, and the lender may forgive the remaining debt.
• The lender must approve the sale, and the process can take several months.

✅ Best For: Borrowers who can’t afford their mortgage but want to avoid foreclosure damage on their credit.

• The borrower voluntarily gives the home back to the lender instead of going through foreclosure.
• This avoids the foreclosure sale, but the borrower must vacate the property.
• The lender may forgive the remaining balance or still pursue a deficiency judgment if the home is worth less than owed.

✅ Best For: Borrowers who want a faster resolution and to avoid the public foreclosure process.

• If the home has equity, selling it outright is often the best way to avoid foreclosure.
• The borrower can use the sale proceeds to pay off the mortgage and avoid damage to their credit.

✅ Best For: Homeowners with equity who want a clean break without negative credit consequences.

• Chapter 13 Bankruptcy can stop foreclosure and allow the borrower to create a repayment plan over 3-5 years.
• Chapter 7 Bankruptcy may temporarily delay foreclosure but won’t stop it if payments aren’t made.

✅ Best For: Homeowners who need legal protection from creditors and want to reorganize debts.

The best foreclosure alternative depends on:

• Can you afford to stay in the home? (Loan reinstatement, modification, forbearance, or repayment plan)
• Do you need to sell? (Short sale, traditional sale)
• Do you want to walk away? (Deed in lieu of foreclosure)
• Do you need legal protection? (Bankruptcy)