
Have you ever wondered what your alternatives are before handing over your property to the bank? When you have a pending transaction with the bank, the first thought that comes to mind is to hand over the property in order to pay off the debt and be a little calmer. But before making this decision you should consider other options that you may not be aware of. A property is our greatest possession and a huge investment, you should take care of it as much as possible.
Currently, there is a great concern in Puerto Rico and it is that many owners do not know what the value of their property is, they get desperate because they react to a situation that is urgent when they cannot pay for the property. If you are a homeowner and you are going through a similar situation, where you are consumed by the stress of not being able to pay the property and you are receiving collection calls from the bank to pay the house, in desperation you are looking for the best option and the only one that is feasible for you is to deliver the house to the bank and get out of this situation as soon as possible.
If you are going through a situation of this level, it is important for you to know that there are rights and laws as well as protections for you as a homeowner. Below we will be informing you what other measures can be considered to avoid surrendering your property.
Are you defaulting on your mortgage or getting close to doing so? There are alternatives to continue paying it, there are several federal agencies that regulate banks so that they are complying with the laws and regulations that must be followed. Knowing these points will give you an advantage so that you do not surrender your property. It is important to emphasize that every homeowner who lives in his or her property as a primary residence and stops paying for some reason or for external factors beyond his or her control, as a homeowner you qualify for these alternatives.
The first step if you find yourself in this situation is to go to the Mitigatión Department, the owner can go in person or call by phone. It is recommended that a call be made, as there are many people in the U.S. who own property in the U.S. and are not paying for their property. Certainly, these people may also qualify, because even if they do not live in the property they must sell it. Each situation is different and goes hand in hand with the reason that is affecting and causing this problem, to choose the most convenient option you must analyze very well to know which one is the best.
Once you have communicated with the Department you must explain your situation, the bank will tell you which is the best option to solve and thus to avoid If you want to surrender the property through foreclosure, this is the first step, if you want to retain your residence, but in the event that you must move to the U.S. you will not be able to retain the property and will have to sell it. There are other alternatives before taking this big step, it is an alternative that should be considered as a last option.
The bank is obliged to offer you alternatives, even long before you fall behind with the payments, if you approach the bank and explain your situation they should give different options particularly. For homeowners who have an FHA, Veteran, Fery mack or Fary Make loan or one that is guaranteed by the federal government have restrictions and regulations, those mortgage loans are known as portfolio loans, since they were paid by the bank and are regulated. Banking is regulated, this means that you have rights, you must ask for them and see to it that they are granted.
Also, all those people who had to leave Puerto Rico and there are many who left their properties abandoned because the opportunity to sell them for some reason passed, several moved when Hurricane Maria occurred and the property remains uninhabited. These owners have not found an alternative of what they can do to solve this situation. The reasons for all this may be: That most of them have not contacted the bank or have not given them the keys as an alternative to voluntarily hand them over and finish the process.
Nowadays, properties do not have the same value as they did 10 or 15 years ago, many properties have increased in value, and it is very likely that your property has “equity”, which is a large profit for selling it. It is important that if this is the situation you contact your trusted Realtor to ask what your property is currently worth so you can make the best decision.
During the pandemic, there was a considerable flow of clients calling the Real Estate company communicating that they were turning their property over to the bank, several people were unaware that they had equity in their home. In this aspect, the Real Estate Broker plays an important role since he/she performs a deep and detailed analysis where it will be discovered if the property has a profit or not.
What happens when after performing the analysis the property has a very low value? This can be related to the condition of the property or the sales in the area where the property is located. At this point, there is an alternative that is important for the owners to know as well as for all the brokers to offer it to their clients, this alternative is called Short Sale.
What is Short Sale? It is an alternative that the bank has for homeowners who do not have equity in their property, owe more on their loan, but can pay that debt through a short sale. If this is your situation, it is important for you to know that you can take another viable option before giving your home to the bank. If you have not previously heard about the Short Sale alternative, it is important that you remind the bank that you want to sell the property through this alternative.
Why is it better to sell through Short Sale?
-You are selling the property to pay off that loan and get out of debt with the bank.
-You want to save your credit
Then another alternative is that when the bank sells the property in a public auction or foreclosure, there is a deficiency that if you owed $300,000 thousand and the property was sold for $200,000 thousand through an auction, there is a $100,000 thousand difference. The Deficient the shopment is that authority that the bank has to pursue that owner who foreclosed on the property for that $100,000,000 deficiency. The bank has the right to pursue the person for that deficiency in a foreclosure.
In a foreclosure the credit is affected and marked, just as in a voluntary surrender. With the Short Sale alternative, the credit is only affected by 50 points on the credit score, a note of the agreed balance is added, but there is no foreclosure mark. The best thing to do is to sell the property through Short Sale before surrendering it voluntarily or through a foreclosure and make it the first option. If there is a chance that you have equity and did not know it, contact your Realtor as soon as possible.
It is very sad to hear of cases of people who gave their property to the bank and had an equity of $100,000,000, that amount could have been left to the owner and not to the bank. All this happens because they did not know the details of this issue and they give their equity to the bank.
Finally, the bank evaluates your situation in order to be able to tell you what your alternative is, either retention with the modification of plans or payments to pay off the debt in a period of time and remember for owners who do not have equity in their property the best option is the sale by Short Sale.