Life Happens. Don’t Rely on Hope.
There are times when, through no fault of your own, you cannot afford your mortgage. This does not mean you should automatically give up your home.
Take It Seriously. Be Proactive.
Ignoring the problem will not make it go away. You need to take the situation seriously and proactively take measures to protect yourself.
The Immediate First Step
Contact your mortgage provider or servicer immediately.
Once you have opened that line of communication, I recommend three specific actions to arm yourself with facts.
Three Actions I Recommend
Order a Title Report
Know exactly what is recorded against your home. You need to see if there are additional liens or judgments you might not be aware of.
Order a BPO
Get an unbiased Broker Price Opinion. You need to know the current market value of the property to determine if you have equity or if you are “underwater.”
Consult a Lawyer
Take both the Title Report and the BPO to a lawyer. They need these documents to give you accurate legal advice.
Why You Need Legal Counsel
The bank is primarily concerned with loss mitigation—protecting their own investment.
Your lawyer is concerned with protecting you. They may be able to help you with options (such as loan modification or bankruptcy protection) that your bank cannot or will not offer you directly.
If You Decide to Sell Later
If you eventually decide to sell via a Short Sale, these documents are mandatory.
- Your agent needs the Title Report to address liens with your lawyer.
- Your agent needs the BPO to prove to the bank that the sale price reflects true market value.
Why You Need Your Own Valuation
In serious financial situations, reliable information is your best defense. A BPO provides the objective data necessary to verify your position.
Common Banking Practice
It is standard procedure for banks to order a BPO when processing loan defaults, loan modifications, or PMI removal requests. They rely on this specific data format to make decisions about your future.
The Unfortunate Truth
While the bank will have a value estimate, they often will not share it with you. Ordering your own independent BPO ensures you aren’t negotiating in the dark during this trying time.