Indecision is a decision in a foreclosure situation.

We are all aware that times are tough and the economy is not re-bounding as quickly as everyone wants: unemployment is at 11.2% in Silicon Valley and more homeowners are falling behind in their mortgage payments. It is unfortunate, things look bleak and people fall into despair, all of this is naturally understandable.

But what I am seeing in my clients, and often times those whose primary language is not English, is something that can be avoided and benefit their situation in the long run.
What I am seeing in some of my silicon valley short sale clients is that that sense of despair is forcing them from making any decision. Not making a decision, unfortunately, is making a decision in a foreclosure situation. By not making a decision, you are essentially telling the lender that you are choosing not to get involved in the resolution of your non-payment: you are essentially giving them the middle finger. Obviously they do not take kindly to this type of behavior.

If you look at the Fannie Mae Underwriting Guideline for re-establishing credit (i.e. time it take before you can qualify for a home loan again), a foreclosure is worse than bankruptcy. After a foreclosure it takes 5 years before that individual is eligible to qualify for another home loan (seasoning); after a bankruptcy, the seasoning time is 4 years; after a silicon valley short sale, it is only 2 years.

Those folks who are shocked and overwhelmed and are just waiting and doing nothing (not paying their mortgage) are essentially making a decision to foreclose on themselves. Even if you feel the end result will be the same, do something to demonstrate to the lenders that you are doing your part to resolve the situation. Contact the lender directly or have someone do it on your behalf if there is a language barrier and try to get a loan modification. Remember, there is a concerted effort by the government and the lenders who took bailout money in trying to help borrowers if they qualify. Granted, not everyone may qualify, but you will not know, unless you make contact. If you qualify, then you can get some relief from your current payment structure; if you don’t qualify, then it opens up other alternative avenues (e.g. silicon valley short sale or bankruptcy) which you must now explore. Either way, you are moving forward and making informed decisions which will help you.


Steve Mun, Silicon Valley Realtor
www.stevemungroup.com