Principal Reduction Program for San Diego Homeowners
A limited number of underwater homeowners in California will soon be able to get principal reductions of up to $100,000 apiece on Fannie Mae and Freddie Mac loans through the federally funded program.
For eligible homeowners, the program will reduce mortgage payments to less than 38 percent of household income by reducing principal to between 105 and 140 percent of the home's value.
The goal is to provide a sustainable mortgage payment, not to provide instant equity. For that reason, the principal reduction is structured as a loan that is forgiven after five years.
If a homeowner gets $100,000 in principal reduction and within five years sells the home for a profit or refinances and takes cash out, the profit or cash-out - up to $100,000 - must be used to repay the loan. After five years, there is no repayment requirement.
Short Sale Frequently Asked Questions
If you have questions that aren't answered here, feel free to contact us.
How do I qualify for a mortgage modification?
The first call you make should be to your lender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking, you can ask to be referred to one of the following departments (different lenders have different names for these departments):
1. Loss Mitigation
2. Mortgage Modification
Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov.
This test will let you know if you are eligible for a modification through the government-sponsored Home Affordability and Stability Program (HASP). For a list of mortgage lenders and servicers, visit www.HopeNow.com.
What if I don’t qualify for a mortgage modification, can’t afford my home, and owe more than it’s worth?
If your mortgage lender or servicer will not work with you to reduce your payment, you may want to consider a short sale.
What is a Short Sale?
A Short Sale is the sale of a home when sales proceeds do not fully pay off the existing loan(s) and lender(s) accepts a discounted payoff to fully satisfy
the loan. The best part, the existing lender pays virtually all sales costs, including commissions, escrow and title fees and repair costs. You get your home sold, the loan(s) paid off and you avoid foreclosure.
If I do a Short Sale, how much will I have to pay to sell my home?
Nothing. All commissions, title and escrow fees, commissions are paid by the lender as part of the Short Sale approval. The lender may also pay any outstanding property taxes.
How will a short sale affect my credit?
The main advantage of a short sale is not having a foreclosure on your credit report. By nearly any measure, a foreclosure is the most damaging event your credit status can encounter - worse than bankruptcy. In the course of getting your short sale approved you may miss your mortgage payments, and these will show on your credit. Short sales may still show up on a credit report as a ““debt settled for less than the amount owed”. Although this can result in a credit score reduction of 100 points or less, a foreclosure will usually reduce your score by more than 250 points. According to Fannie Mae, an individual that forecloses must wait 5 to 7 years, maintain at least a 680 FICO score in the last 2 years, and pay a minimum 10% down on a future home purchase. We have seen customers purchase a new home in as little as two years after their previous short sale.
What are the qualifications for a short sale?