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5 Common Foreclosure MythsThatCost Homeowners A Fortune.
WARNING: Don’t even think of doing anything with your homeuntil you read this letter. Which one of these misconceptions doyou believe, and how much is it going to hurt you?
Some of these may even affect your ability to get a job. Why? Becausemany employers now require credit checks when hiring.
Common Foreclosure Myth #1: No matter what I do, I’mgoing to owe money to someone.
 
On most short sales, the seller is ableto walk away owing the bank nothing. Of course, it’s all up to each individual bank, but eighttimes out of ten, you can walk away owing nothing. A bank loses way less money on a shortsale than a normal foreclosure. In return for you helping them out, they will help you out. Hereis why there is this big difference between a short sale and a foreclosure.On a short sale, the utilities are turned on and someone is living in the house. A vacant house isway harder to sell. The buyer knows the home is bank owned and will adjust their offer down because of that. On a bank owned house, the house sits there for 6-9 months empty before itsells. The bank has to pay to keep it up and insure it. They can’t loan that money out and collectinterest. Also, there is the liability if some kid goes into the house and gets hurt. Because of thatthe banks want to do short sales and are very willing to work with you.
Myth #2: A Foreclosure will go off my record in 3-5years.
Yes, you might be able to get a loan after 5 years, but here’s the problem. When youwalk away, the bank will come back and get a judgment for the money they lose, and also anymoney they have to spend. They’ll tack on attorney’s fees, late payments, interest, maintenance,lawn mowing costs, realtor fees, locksmith costs, title insurance, and all sorts of other fees. This judgment will stay with you until you pay it off. Let’s say you owe $200,000 on your home andit’s now worth $170,000. According to a study done on this, if you do a short sale, the bank willlose 19%. But, if the bank takes the home back and waits for it to resell, they will lose 41%.That means you’ll owe them $82,000 on average. That is the judgment amount.This deficiency converts to a judgment and judgments last up to 20 years here in New Jersey.Most of the time, the bank itself will not come after you. But, the bank will sell the right tocollect the money to a third party collection company. That company will then attempt to collectfrom you.Have you ever experienced the calls you get when you get behind on a credit card? Those people are vicious! They just keep calling and calling and calling. Not only that, but they will drag you to court and ask for all your financial information. They canforce you to bring in your bank statements and information on any retirement
 
accounts such as an IRA or 401K. And if you don’t bring in this information, they can have awarrant issued for your arrest. You may have no prior criminal history, but you will after that.The court gives judgment collectors a lot of ways to go after you. They can send a cop out toyour house to grab anything valuable. Do you have a nice TV? They might take that. Is your car  paid off? If it isn’t absolutely necessary for you to use to get to work, they can take that too. Noone will give you a loan with that judgment on your credit. You might not even be able to get acell phone.The worst thing is that this debt purchasing company will be going after you for 10 or even 20year. They will do whatever they can to collect what they think is “their money.” Even your current and future employment might be affected because many employers now require creditchecks.
Myth #3: A Short Sale will take 8-12 months and candrag out even longer.
This is the case when the person you are dealing withdoesn’t know what they are doing. Our short sales average 45 to 90 days. We do these everyday, day in and day out. In fact, we have done over 27 short sales with banks ranging fromChase to Countrywide to Wachovia. The difference between dealing with someone who knowswhat they’re doing is this. It’s like the difference between hiring a top dog lawyer for a lawsuitversus hiring your friend who isn’t a lawyer.When we work with you we will handle everything and do all the work. All you have to do is provide us with basic documents and that’s it. We will call the bank, handle the negotiations,and keep you updated as to what’s going on.
Myth #4: Banks and lenders rarely accept short sales.
We are able to get short sales accepted most of the time. Here’s why your bank may havealready told you they will only take X amount. But, let’s say someone owed you a lot of moneyand they wanted to pay you only half of what they owe. What would you say? You’d probablytell them to pay you the full amount, right? But, if the person came to you with cash and toldyou they just simply could not afford to pay you any more, what would you do? You’d probablyaccept whatever you could get, right? Well, it’s the same way with a bank.The banks often tell you they won’t take a short sale. The reason is because they want you to pay them the full amount. Or, they want to get you to agree to pay them monthly for the rest of your life.
Myth #5: A Short Sale is no less damaging to my creditthan a foreclosure.
I can tell you one thing. Fannie Mae and Freddie Mac, whohold the loans on about half of the loans in the country don’t think so. They recently changedtheir requirements. Fannie Mae only requires two years on a short sale before you can get a newloan. If you give the house back to the bank, you have to wait for five years. Several newrequirements now apply that can drag this out to 7 years. These companies are the backers of more than half of the loans issued today. This makes foreclosure more damaging than even a bankruptcy, which requires a 4 year wait.
 
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