Yikes. That’s probably the first thing you’re thinking. We just received this thing called a “Notice of Trustee’s Sale” and we have no idea what went wrong (“except that we stopped paying our mortgage a few months ago.”)
AHA! That’s the problem. What’s happened is the bank has taken action to recover the home to cover the note. The fact that the note is greater than the value of your home, most likely, is irrelevant at this point. The bank is going to take your house back.
The good news for you is that the bank doesn’t really want the house. They want as much money out of the house as possible, but they don’t want the house because it costs tens of thousands of dollars for them to auction it, take it back, maintain it, re-market it, and sell it.
The real error in the entire situation was the fact that you didn’t recognize that you needed to have this house on the market a long time ago. The banks will tell you that you need to miss payments in order to put your house on the market and have a short sale approved, but this is not true. With a true hardship, whether or not you can pay your mortgage today or not isn’t important. What’s important is whether or not you are headed for the dreaded foreclosure in the near future.
If you are, then you don’t need to miss payments. In fact, if you are able to keep up with the payments, you are more likely to be able to down-size by buying another home after this process. The key is whether or not you are keeping up to date on all of your payments.
So, what do you do now?
You’re headed for foreclosure.
- You can re-instate and get caught up, which will cost you more than the amount you’re behind
- You can walk away from the house and experience turmoil, have a larger than required deficiency, and potentially face future law-suits and high tax liabilities;
- or you can attempt to buffer the losses and have your lender release you from your note by selling the house!
But we owe more than the house is worth! Right, that’s why it’s a short sale. You’re going to bring a market value offer to the lender, and you’re going to get them to approve it and allow the sale.
It happens all day long in this market, and it’s going to keep happening for years to come. Short Selling your home is the best preventative measure you can take now that you KNOW you’re being kicked out.