As soon as the paperwork goes through, I will have earned a new real estate designation called SFR – or Short Sales & Foreclosure Resource.  It’s not really a designation that I’m proud to have.  After completing many hours of seminars and classes, frankly it’s one I do not like at all.  But it is a part of the reality of real estate today.

I talked with a reporter several days ago about a subdivision in my area and found that a solid 30 percent of listings were distress sales – that is they were either foreclosed already, short sales, or HUD houses.  Short sales are a better option than foreclosure because the seller’s credit score is impacted less.  Plus banks prefer to sell when a property is occupied because it’s more likely to be kept in better shape.

There are some options a homeowner has before resorting to a short sale … here’s a list of some:

• Repayment Plan – the bank can work with homeowner to set up a repayment plan rather than an outright sale.
• Modification of Loan – Loan modification can change the term and amount of the home loan so the homeowner can afford payments. They must have an income, however, for this to be a real option because they must have the ability to pay.
• Forbearance – Lender may give homeowner several months of absent payments to allow time to get back on their feet before resuming mortgage payment.
• Refinance – Refinance the home loan with better terms which could include reducing the payment by making it a 40 year loan rather than a 30 year loan.
• Reinstatement – Pay total amount past due including any attorney fees.
• Chapter 13 Bankruptcy – Stops foreclosure proceedings and allows homeowner to catch up on home loan. The loan amount will still need to be paid, however.

Make sure if you are considering any of the above that you stay in communication with your lender.  Also, always seeks legal or tax advice on the implications these actions may have on you.

For more information about the SFR, visit the Realtor.org site here.