For many homebuyers looking to purchase a residence during Wilmington’s real estate boom, it was simply an offer many could not afford to pass up.

“You had a situation where the banks were approving mortgages to almost anyone that had a pulse,” said Sherwood Strickland, a Realtor and broker of Real Estate Solution Group with Coldwell Banker. “For those that were financed, it was good at the time . . . but I think realty has really set in for some people who can no longer afford their mortgage.”

He’s right.

As the economy tanked, many homeowners fell victim to its wrath, making it difficult to maintain mortgage payments.

“Everyone has been affected by this economy,” said Realtor and group member Sherri Pickard. “You have people who have lost their jobs, and in some cases paying for a home they simply can’t afford anymore  . . . it’s a very difficult situation.”

Pickard said foreclosure — the process of taking possession of a mortgaged property as a result of someone’s failure to keep up mortgage payments — has become a popular means for homeowners to unload their now-toxic asset.

But this team of specialized Realtors said there is better way — short selling.

“Not many people are aware of this option, but it’s a win-win for the homeowner, the bank and the neighborhood,” said group member and Realtor Diane Bernatz. “But we’re working to change that perception.”

Short sell seminars

For several months, members of the group have been working with hundreds of homeowners across the region by offering free, monthly seminars about the options homeowners and investors have to address their underwater properties and financial situation.

A short sale is when lien holders — typically banks — agree to release their lien on real estate, and accept less than the amount owed on the debt because the property owner can no longer afford to repay the full amount.

The seminars outline market myths about short sales and foreclosures, and include credit repair consultation by tax experts and attorneys to help distressed homeowners if their short sale will result in a tax liability or deficiency.

Tim Milam, president of Coldwell Banker Sea Coast Advantage Realty, said the three Realtors first approached him after noticing a spike in foreclosures in the region early last year.

“They recognized a need in the region, and they have lined up a [certified public accountant] and an attorney to help people make the right decision before proceeding with the short sale of their property,” Milam said of the short sale group.

Pickard said by the time distressed property owners meet with them, they are already dealing with a serious crisis.

“You’re talking about a system that is stacked against them,” Pickard said. “By the time they meet us, they’re angry, they’re emotional, they’re desparate for help . . . they just want to do the right thing, and it seems as if no one wants to help.”

Bernatz said some homeowners are filing for foreclosure, or walking away from the property in the hopes that the bank will leave them alone — that’s a major myth, according to the group.

“Trust me, despite filing for foreclosure, if the bank can seek a deficiency they are going to do it,” Sherwood said.

Bernatz added that homeowners now have better options for mitigating their troubled mortgages.

“Lenders are starting to step up to elicit cooperation of distressed homeowners,” she said. “People may be going into foreclosure that don’t need to.”

Pickard said in many cases the proceeds from selling the property will fall short of the balance owed; however, banks would recoup more of the original amount by working with the homeowners to complete a short sale of the property rather than foreclose.

“Short sales are not business as usual,” Pickard said. “I think people have to be careful in selecting a Realtors that is thoroughly educated on short sales.”

She added that short sale agreements do not necessarily release borrowers from their obligations to repay any deficiencies of the loans unless specifically agreed to between the parties. However, depending on the lender and the demonstrated hardship, some homeowners could execute a short sale without any future obligations.

“There are two different types of short sales,” Pickard said. “First you have the conventional short sale, where unless the bank offers a special program, the homeowner could be responsible for paying between 10 or 80 percent of the deficiency. Then you have the [Home Affordability Foreclosure Alternative] where, if eligible, the homeowner could receive a $3,000 stipend to vacate the property upon closing and is guaranteed no deficiency . . . we make sure everyone we see applies for the HAFA if they are eligible.”

Edward Graham, professor of finance at UNCW Cameron School of Business, agreed homeowners would be better served by finding lender-sponsored programs, than filing for foreclosure.

“With foreclosures, the banks are shooting themselves in the foot,” Graham said.