Dustin presented a great seminar on Saturday. His information was very timely as he started the presentation with a history of the real estate market and predictions by analysts for the next few years. One of the biggest factors that will affect the market is lending institutions that are turning their repossessed houses back into the market. Analysts estimate this will keep home prices from a meaningful recovery for some time. There are still about 800,000 mortgages somewhere in the foreclosure process and another 1.5 million in serious delinquency, half of which could end up in foreclosure.
Many people are in situations where they owe more on their home than its value. Of these, many are faced with economic, health, or job situations which are requiring them to sell their house. Others are not willing to wait for the market to turn around and want to sell now.
Options for people who either need to sell their home or can’t continue to make payments are short sale, loan modification, foreclosure, or bankruptcy. Most of the discussion centered on the first two options.
Some very important things were revealed in the discussions regarding a short sale:
o If your loan is current, you are not eligible for a short sale.
o You must be willing to ruin your credit score by defaulting.
o You may need to sign a note for future payments or bring cash to the closing.
o 2nd lien holders can come after you financially unless a non recourse agreement is reached.
o You will have to reveal all your assets, which can be used as ammunition against you if a short sales is not approved.
o You believe that a loan modification will not work in your case.
o You must explain and prove financial hardship
There was also a lot of discussion about loan modifications, which generally means that you still have equity in your home. If you don’t have equity, then you would have to pay down the current mortgage.
The foreclosure option means that your credit score is ruined. As in a short sale, 2nd lien holders can still pursue you. It is possible to continue to live in your home for one to two years before foreclosure is completed. Some institutions will even allow you to rent the home after foreclosure.
Bankruptcy was not discussed as it would take another seminar.
Other thoughts that were expressed either by Dustin or those in attendance:
o Reverse mortgages should be avoided.
o Investing in a short sale to be used for rental property may be a good investment at this time.
Christian principles
Here are some Christian principles (from the Elders of Canyon Hills Community Church) regarding tough decisions about not being able or choosing not to fulfill a mortgage contract.
o Sovereignty of God - Nothing can happen to you and your family without first being a part of God's sovereign
plan for you, your wife, and your children. Isaiah 55:8, 9; Isaiah 46:10; Romans 8:28-29; and 1 Corinthians 10:13 are all good verses to focus on to keep the right frame of mind as you go down this path trying to figure out what to do.
o God's Provision - God has provided you with a roof over your head. He has promised to clothe, feed, and provide a place to lay your head. Being thankful for and content with what God has provided you is something that you need to make sure you are building into your family, not just your own personal life. Matthew 6:25-34 and Philippians
4:4-9 are great passages of Scripture to focus on in this area as you try to make a decision.
o God's Glory - Remember that this is our goal in life. America does a number on us in this area. We can get so caught up in what society and culture say is the right thing to do and lose sight of the fact that our number one goal is to make sure that we are glorifying God in this life. As you are trying to decide where to go, we would encourage you to wrestle with the question of whether or not you want to be more comfortable in this life, or will moving produce a great opportunity to glorify God with your life and your family? 1 Corinthians 10:31 and 2 Corinthians 5:9 are two passages of Scripture that directly relate to this and would be good through which to read this decision.
o Promises We Make - Ecclesiastes 5:4 and Matthew 5:33-37 both speak to the promises we make. Both sets of Scripture seem to indicate that we must follow through with the promises we make. We know that Ecclesiastes is more or less about promises to God, but signing your name to a promissory note as a representative of God (2 Corinthians 5:20) falls underneath this Scripture. If you made the promise to the bank and THEY do not want to change the contract you signed, then we don't think that you can or are biblically allowed to simply let the home go into foreclosure because it's now a "bad investment" for your family or you don't like it anymore, especially IF you can
afford it. There are a lot of people in the church that are in the exact same spot you are in.
o The phrase above is underlined because it's a completely different story if the bank is willing to change the contents of the note. If they want to forgive the debt that's up to them, and there would be nothing wrong with that. To our knowledge there is nothing biblically wrong with a short sale, but keep in mind that it will damage your credit score and be a major impact if you go to buy a house later on down the road. As we stated though, if the lender agrees to modify the contract, then we don't see anything in Scripture forbidding you from doing that.
So what's our suggestion? We would encourage you to pray according to Philippians 4:4-9. We firmly believe that if you are faithful to do this, God will do something that is beyond what you can imagine or plan. Remember that He gives us the blessings (homes included) and simply asks us to be faithful with those blessings.
Many people are in situations where they owe more on their home than its value. Of these, many are faced with economic, health, or job situations which are requiring them to sell their house. Others are not willing to wait for the market to turn around and want to sell now.
Options for people who either need to sell their home or can’t continue to make payments are short sale, loan modification, foreclosure, or bankruptcy. Most of the discussion centered on the first two options.
Some very important things were revealed in the discussions regarding a short sale:
o If your loan is current, you are not eligible for a short sale.
o You must be willing to ruin your credit score by defaulting.
o You may need to sign a note for future payments or bring cash to the closing.
o 2nd lien holders can come after you financially unless a non recourse agreement is reached.
o You will have to reveal all your assets, which can be used as ammunition against you if a short sales is not approved.
o You believe that a loan modification will not work in your case.
o You must explain and prove financial hardship
There was also a lot of discussion about loan modifications, which generally means that you still have equity in your home. If you don’t have equity, then you would have to pay down the current mortgage.
The foreclosure option means that your credit score is ruined. As in a short sale, 2nd lien holders can still pursue you. It is possible to continue to live in your home for one to two years before foreclosure is completed. Some institutions will even allow you to rent the home after foreclosure.
Bankruptcy was not discussed as it would take another seminar.
Other thoughts that were expressed either by Dustin or those in attendance:
o Reverse mortgages should be avoided.
o Investing in a short sale to be used for rental property may be a good investment at this time.
Christian principles
Here are some Christian principles (from the Elders of Canyon Hills Community Church) regarding tough decisions about not being able or choosing not to fulfill a mortgage contract.
o Sovereignty of God - Nothing can happen to you and your family without first being a part of God's sovereign
plan for you, your wife, and your children. Isaiah 55:8, 9; Isaiah 46:10; Romans 8:28-29; and 1 Corinthians 10:13 are all good verses to focus on to keep the right frame of mind as you go down this path trying to figure out what to do.
o God's Provision - God has provided you with a roof over your head. He has promised to clothe, feed, and provide a place to lay your head. Being thankful for and content with what God has provided you is something that you need to make sure you are building into your family, not just your own personal life. Matthew 6:25-34 and Philippians
4:4-9 are great passages of Scripture to focus on in this area as you try to make a decision.
o God's Glory - Remember that this is our goal in life. America does a number on us in this area. We can get so caught up in what society and culture say is the right thing to do and lose sight of the fact that our number one goal is to make sure that we are glorifying God in this life. As you are trying to decide where to go, we would encourage you to wrestle with the question of whether or not you want to be more comfortable in this life, or will moving produce a great opportunity to glorify God with your life and your family? 1 Corinthians 10:31 and 2 Corinthians 5:9 are two passages of Scripture that directly relate to this and would be good through which to read this decision.
o Promises We Make - Ecclesiastes 5:4 and Matthew 5:33-37 both speak to the promises we make. Both sets of Scripture seem to indicate that we must follow through with the promises we make. We know that Ecclesiastes is more or less about promises to God, but signing your name to a promissory note as a representative of God (2 Corinthians 5:20) falls underneath this Scripture. If you made the promise to the bank and THEY do not want to change the contract you signed, then we don't think that you can or are biblically allowed to simply let the home go into foreclosure because it's now a "bad investment" for your family or you don't like it anymore, especially IF you can
afford it. There are a lot of people in the church that are in the exact same spot you are in.
o The phrase above is underlined because it's a completely different story if the bank is willing to change the contents of the note. If they want to forgive the debt that's up to them, and there would be nothing wrong with that. To our knowledge there is nothing biblically wrong with a short sale, but keep in mind that it will damage your credit score and be a major impact if you go to buy a house later on down the road. As we stated though, if the lender agrees to modify the contract, then we don't see anything in Scripture forbidding you from doing that.
So what's our suggestion? We would encourage you to pray according to Philippians 4:4-9. We firmly believe that if you are faithful to do this, God will do something that is beyond what you can imagine or plan. Remember that He gives us the blessings (homes included) and simply asks us to be faithful with those blessings.
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