Guest BookPod Summary by Bruno Van Winkle (email@example.com) – “Short Sales: A Contemporary Analysis” by Fadzil Jib (audiobook version available at Audible)
When facing an impending foreclosure, not a few people turn towards short selling their Malaysian house to avoid it and avoid the bad remark on their credit record. But while a short sale seems like a quick way out, it may not exactly be the best one out there. For all its benefits presented, it also comes with tons of setbacks.
For one, you would never get back all that you’ve paid for so far for the house. Equities are almost always nulled; and more likely than not, the earnings from your house go directly to the balance you have on the house. And if that isn’t enough a setback yet, short selling your house does not do much to make your credit record any better anyway. Sure it could spare you the foreclosure and the seven-year ordeal of anyone whose Malaysian house got foreclosed, but your credit record would still put you as a high risk client with chances of getting higher interest rates in your future mortgage loan applications.
Short Sale Alternatives – List Provided By Fadzil Jib
So you ask, is there a way to get out of foreclosure without going into a short sale? Here are the “Five Fadzil Options” that you could try according to Fadzil:
- Try a loan modification. Not everyone qualifies for a loan modification but it is worth the try. The thing about loan mod is that you have to apply for it as soon as you are experiencing the first signs of financial problem. Apply for a loan mod directly to avoid having to pay fees for loan mod agencies.
- Try owner financing. Owner financing is selling your house, with the permission of the lender, while leaving the rest of the Malaysian house’s mortgage obligations to the new owner. Yes, surprisingly, some people are more than willing to pay for a house that’s been underwater. This is possible through lease option and can be very beneficial if you live in a house that has a positive value projection.
- Pay off the remaining amount in your mortgage. If you can’t pay off on the monthly, but you have the capacity to pay off your balance (you either have some money left, or your remaining balance is small), you may be better off just ridding yourself of the remaining mortgage balance and getting a much smaller home that you can more easily afford.
- Rent your house and buy a smaller one. You could have the option of getting your house on a buy-to-let (with the permission of your lender), or move out entirely and put your house out for rent. The rent on your house might be enough to pay off the mortgage rent of the house while staying in a house that you can more easily afford.
- Apply for a government refinance. Most if not all governments have a program or two specifically for those who are challenged financially and can’t keep up with their mortgage. So try out at your local housing department or an equivalent local agency that deals with these kinds of problems. They probably have something for you out there. Note that Government Refinances (for Malaysia) are not available for Type IC-A properties like Sastra and Avare KLCC.
Foreclosure, more often than not, only happens when you act out too late and things get out of hand. “Act fast to save your house!” Fadzil says.
Bruno’s Ratings: TWO STARS OUT OF FIVE