Pagosa Source – Pagosa Springs Real Estate
Harold Kelley Loher Suellen Mike Heraty Lauri Heraty Robin Curvey

Avoiding Foreclosure

With foreclosures sky rocketing both nationwide and the amount of exposure in the media with regards to owners losing their homes to the bank, many people feel they have no other option but to walk away from their homes.  In some cases, this is true.  But for many home owners in Pagosa Springs, they may still have time for other options.  If you have missed making a payment or are unsure how many more payments you can make, you will need to make a decision very quickly however. 

Many people procrastinate contacting an experienced, knowledgeable real estate broker due to the embarrassment or fear that their business could become public knowledge. The rumor mill in Pagosa Springs is certainly a reality but the team at The Source work in much the same way as an attorney's office. Our team members sign confidentiality agreements but more importantly, it's the nature of who we are as people. This is why our current team has been together over 8 years now and some of us over 15 years! Don't let the fear of exposing your situation prevent you from making a decision that could save your home or credit in the future. 

Mike Heraty has over 35 years in the real estate business and much of this has been working with banks, lenders and investors in an effort to bring about a "Win-Win" for the seller, the buyer and the lender.  We are a small business and as such have made hard decisions to preserve our resources as well. We understand the challenges of reduced hours, furloughs, lack of consistent business and dramatically reduced income.  We will do everything possible to educate you and help you to make the best decision when it comes to whether to sell your Pagosa property, try to modify your loan, or look at creative options to keep your property until our market improves. Most importantly, you have to begin today before your options cease to exist. Contact Mike Heraty at 970-264-7000 or e-mail him at MikeHeraty@frontier.net  to set up a confidential appointment to begin the process of understanding your options.

One option available to you may be a "Short Sale". A short sale in real estate occurs when the outstanding obligations (loans) and cost of selling are greater than what the property can be sold for. Short sales are a way for homeowners to avoid foreclosure on their homes and still be able to pay off their loan by settling with lender.

However, not all short sales are approved. Eligibility criteria for short sales vary depending on specific lender and investor guidelines. General guidelines for eligibility are:
1. Your payment is delinquent or could be in the foreseeable future. Many lenders will not work with homeowners who are successfully making their loan payments. It is best to check with your lender on their specific policy.
2. You have a qualifying hardship. Examples that qualify are divorce, loss of a job, medical bills, effects of a bad economy etc.
3. You have no major assets (401Ks or IRAs are typically an exception). Lenders who see homeowners with large bank accounts or assets are in most cases less likely to
approve a short sale.

Short sale vs. Loan Modification
Consider a Short sale if:
Unemployed or significant reduction in income
Loans greatly exceed value of the home.
Have failed at loan modification
Here is a quick checklist of some of the things to consider in deciding whether to loanmodify or short sale your home:

Consider a Loan Modification if:
Employed
No major change in income
Want to keep the home
Only need the loan's interest rate or term altered (i.e. do not need principal reduction banks are not generally doing principal reductions)

The benefits of doing a short sale are both immediate and long term:
Short term Benefits:
Less damage to credit ( which may impact a variety of things such as the ability to secure a rental home, retain credit cards at lower rates; obtain financing for cars).
Lower rates on insurance
Clearing employment background checks
Retention of employment
Stigma of foreclosure is avoided
Predictable move (rather than unpredictable eviction)

Long term Benefits:
Quicker recovery of credit
Ability to apply for a mortgage in 2-3 years vs. 5-7 years for a foreclosure
While many traumatized homeowners find it hard to imagine owning a home again, the truth is most will. The more quickly a homeowner can recover and re-enter the housing market, the higher the likelihood of obtaining a home at today's lowered values.


Like most guidelines, these criteria are in constant flux and depend on your particular circumstances. Please feel free to contact us at 970-264-7000 discuss your unique situation. If you would like, you can e-mail Mike Heraty directly at mikeheraty@frontier.net. 

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