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What is a Pre-Foreclosure?

1

Definition
Pre-foreclosure is the stage between a homeowner falling behind on mortgage payments and the property being officially foreclosed on by the lender.

2

Triggers
Missed mortgage payments, job loss, medical bills, or other financial hardships can lead to a pre-foreclosure situation.

3

Consequences
During pre-foreclosure, homeowners are at risk of losing their home if they cannot resolve the delinquent payments.
Understanding the Pre-Foreclosure Process

1

Missed Payments
Homeowner falls behind on mortgage payments, usually 3-6 months.

2

Notice of Default
Lender sends a formal notice that the homeowner is in default on their mortgage.

3

Foreclosure Auction
If the homeowner cannot resolve the default, the property may be sold at a foreclosure auction.
Impact on Homeowners
Emotional Toll
Pre-foreclosure can be a deeply stressful and overwhelming experience, causing anxiety, depression, and a sense of failure.
Financial Consequences
Missed payments, fees, and the potential loss of the home can have a severe impact on a homeowner's credit and financial stability. Often making it harder to obtain future loans or credit.
Limited Options
Homeowners in Pre-Foreclosure may have fewer options to resolve their situation and avoid losing their home.
Remember, you're not alone. There are resources and professionals available to help you navigate this challenging time and find the best solution for your unique situation.
Options for Homeowners in Pre-Foreclosure
Loan Modification
Negotiate with the lender to adjust the terms of the mortgage, such as lower interest rates or extended repayment periods.
Bankruptcy Filing
Explore the legal option of Filing for bankruptcy to delay or prevent foreclosure.
Short Sale
Sell the home for less than the outstanding mortgage balance, with the lender's approval, to avoid foreclosure.
Deed in Lieu of Foreclosure
Voluntarily hand over the deed to the lender in exchange for avoiding the foreclosure process.
SHORT SALE FAQs
Q. What is a Short Sale?
A Short Sale is when the homeowner sells their home for less than what it is owed on their loan, and the lender accepts the amount as the payment in full. (A Short Sale is a sales transaction in which the seller's mortgage lender agrees to accept a payoff of less than the balance due on the loan.)
Q. How Does My Bank Benefit by Allowing The Short Sale?
Simple. It is Expensive for the lender to foreclosure on a home. Some of the lender's costs could include Legal fees, Insurance, Taxes, Eviction cost, Selling cost, etc. On average, it costs as high as $50,000 per foreclosed property. The lender is in the business of Loaning NOT owning!
Q. Impact on Credit - Short Sale vs. Foreclosure
Short Sales are considered preferable to foreclosures because short sale (1) lessen the impact a foreclosure can have on the surrounding community and (2) won't damage the distressed your credit as much as a foreclosure. For instance, if you are still current with other payments, a short sale may lower your credit score by as little as 50 points.
Q. Why Should I Consider a Short Sale?
The Short Sale happens in the Pre-foreclosure stage. If the short sale is successful, the seller escapes foreclosure and the corresponding hit to their credit report. They only sustain smaller hit on their credit report for any missed payments .
Q. We have a 2nd mortgage. Am I still Qualified?
YES! Both of your lenders will need to be satisfied in some way to complete the short sale. If your first lender will be paid off by the sale, then you just negotiate the terms with the second lender. Most short sales do involve 1st and 2nd lien holders.
Q. Why Short Sale is Win-Win for the Lender, Seller and Buyer?
For lenders, a short sale is the best solution. If the banks take the property back, they lose another 20-30%. A short sale is the real best solution for them. A Short Sale is better than No Sale! For the homeowners, they get a chance to a fresh start. A Short Sale may secure Financial Relief they need and Emotional Relief. They could buy their next home in 2 years.
Q. What does a Short Sale Cost?
A Short Sale does NOT cost anything to homeowners. Your bank will pay all the fees of the real estate sales including closing costs and real estate commissions only when we complete your short sale successfully.
Q. How is a Short Sale different from Foreclosure?
A foreclosure stays on your record for 8+ years while a short sale will allow you to purchase your next home within 2 years.
Q. Why Short Sales Fail?
Sometimes they do: There are many reasons why short sales fail, including, but not limited to the following:
• Incomplete Short Sale Package
• No reasonable chance of closing
• Inexperienced Short Sale Listing Agent
• Release of deficiency
• Junior Liens
Working with Short Sale Professionals
Trusted Advisor
A Short Sale expert can provide guidance and support throughout the pre-foreclosure process.
Market Expertise
They can help assess the home's value and explore alternative options.
Financial Guidance
Short Sale professionals can help navigate the financial complexities of pre-foreclosure.
Contact Us for Personalized Support
Our team of experienced professionals is here to guide you through the pre-foreclosure process and help you explore all available options to keep your home.

Call us now at: 775-771-1238