Loan mods, short sales and credit repair could be in the cards for your clients

Shel House, president MLS Mortgage Group

As published in Scotsman Guide's Residential Edition, May 2010.

The current real estate market, flooded with distressed properties, has left many homeowners in a difficult situation. Foreclosures and short sales have forced down home prices, effectively forcing many potential sellers to wait out the downturn. In many cases, this occurs despite imminent adjustments to current homeowners' ARMs or recent job loss.

Fortunately, options exist for these distressed homeowners. By providing them with a resolution, mortgage brokers can stick in borrowers' minds as valuable resources and trusted advisers.

Debt Relief Act ___________________________ The Mortgage Forgiveness Debt Relief Act of 2007 applies to forgiven debt resulting from home-price declines or taxpayer financial hardships. To qualify, debt must be discharged by the end of 2012. For more information, visit the Internal Revenue Service's information page: sctsm.in/MDRA2007.

What many borrowers need most are loan modifications, short-sales negotiations or credit repair. Whether you decide to become a consultant for any of these services or refer them to other professionals, it's a good idea to have a basic understanding of each.

Loan modification

Despite low interest rates, many homeowners can't refinance into a fixed-rate or lower-rate loan. Job loss and lack of home equity represent two of the main reasons this occurs.

Loan modifications offer borrowers an option to reduce their payment by lowering the interest rate, lowering the principal balance or extending the loan term.

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