|Real Estate Information|
What Homeowners Should Know to Stop Foreclosure- Speaking Your Lenders Language
Financial literacy is the means of empowering consumers to make informed financial decisions through exposure to accurate and timely information. In no other area is the void of accurate information more evident that in the area of foreclosure.
The national foreclosure rate is at the highest level since the Great Depression. Families fall behind on the mortgage payments because of illness, job layoffs, business failure, divorce and marital problems, and bad money management decisions. Foreclosure and the loss of the home is the usual result. Foreclosure is financially and psychologically devastating to the stability of the household.
This article provides information to expose homeowners to the financial principles of loss mitigation. Loss mitigation is essential to asset protection because it provides the borrower with information necessary to make good decisions. Learning the programs or "tools" available as an alternative to foreclosure is the key to preserving home ownership.
For example, If I told you that the mortgage servicing industry reports average loss of $20,000 to $30,000 per foreclosure, then you may be inclined to believe that foreclosure is not an efficient and cost effective means of collections for the lender. According to Vic Draper, President of Universal Default Services, "33% of all mortgage defaults that go to REO never made contact with the borrower!" The lender does not want your home and will work out a financial alternative if you speak their language.
LOSS MITIGATION TOOLS
A homeowner should know and understand options available during times of crisis. It makes the difference in gaining ground in challenging situations. A point well presented by Gerry Spence, legendary attorney and best selling author of "How to Argue and Win Every Time," a book I first bought as a young attorney and have since read numerous times. Spence stresses that you cannot make the winning argument if you are speaking English and the other person is speaking French. Parlez-vous Francais?
The following financial tools act as a safety net that allows for a quicker recovery. The Department of Housing and Urban Development (HUD) has been instrumental in establishing guidelines to assist homeowners experiencing financial hardships. The goal is to offer financial alternatives to foreclosure, while allowing lenders to make determinations based on certain risk criteria. Lenders also benefit from the prevention of losses due to foreclosure sales. Without these programs, millions of people would lose homes each year.
Immediately contact the lender to report a temporary loss or reduction in income and signup for a forbearance. A forbearance plan is designed to bring payments current over a period of time by paying a full payment each month, plus a partial payment on the delinquent amount. An initial down payment is required. Most lenders have a forbearance program. However, you must be diligent in requesting forbearance even if it means speaking with a manager with authority to approve the plan. Request that the approval be sent to you in writing.
An important subsection in acceptance of forbearance is the probability of successfully completing the plan. It is easy to agree to any repayment plan when desperately trying to stop foreclosure. You will be happy to stop the process by any means necessary.
I have had clients who agreed to ridiculous repayment plans that they obviously did not have the income to cover. In some cases, it appeared that the lender pulled numbers out of the sky without gathering information on the homeowner's ability to repay. This is poor mitigation technique that will normally count against the client as a broken promise to pay and often leads to the decision to sell the property rather than take additional risk with the homeowner.
During the early part of 2004, a prospective client contacted Save Your Home two days before his home was scheduled for sale. Despite time limitations, we had a very good relationship with this particular lender and agreed to intervene on the homeowner's behalf.
He had $8,000 to use as a down payment to stop the sale but the lender refused to accept it because a forbearance plan had been put in place three months earlier in which our client had paid a $6,500 down payment, but failed to make the subsequent payments under the terms of the agreement. This made him a bad risk for reinstatement and foreclosure seemed the most prudent financial decision for the lender to recover its arrearage.
However, the truth of the matter was the homeowner agreed to a plan that he could not afford to pay. It was not a good plan because it was based on a higher monthly income due to miscalculations where a quarterly bonus should have appeared on the financial status report. His monthly income had been overstated by $600 per month. When it was time to make the other payments, he was rich on paper but was cash poor. He did not have the income and as a result violated the repayment plan.
We convinced the lender to take another look at the numbers. In the end, the lender accepted a $2,500 down payment and modified the terms of the loan. The client was able to keep his home because he correctly reported his income to the lender. Make sure that you report your income accurately so that you can afford the repayment plan offered to you.
When the financial loss is due to an illness, death or loss of a spouse, or unexpected increase in expenses, (e.g. tax levy, sick child, or other permanent hardships), talk to the lender about a loan modification. A loan modification changes the terms of the loan to lower the payments. Documentation of the hardship will be necessary. Loan modifications are granted frequently. Still, you must aggressively negotiate with the lender. Refer to examples in case study.
This is a type of home equity loan that allows you to convert some of the equity into cash while retaining ownership. If you are 62 or older and are "house-rich and "cash-poor," a reverse mortgage is an option to consider. Consult with your family, attorney, or financial advisor before applying for a reverse mortgage. Knowing your rights and responsibilities as a borrower may help to minimize financial risks and the threat of foreclosure.
DEED IN LIEU OF FORECLOSURE
If turning over the home is an option, contact the lender to voluntary release the deed to the property with the stipulation that the lender agrees not to start or complete foreclosure proceedings. Many lenders will agree to this arrangement since it gives them possession of the property minus exorbitant legal fees and court costs. Further, request that the lender remove some or all of the missed payment reports to the credit bureau. If not, threaten to file bankruptcy or to fight to keep the home. Get all agreements in writing on company letterhead.
A partial claim is an interest free loan available on FHA/HUD loans. To qualify, a loan must be at least 4 months delinquent but not more than 12 months. If approved, the partial claim is repaid after the first loan has been paid in full.
SHORT REFINANCE The area of loss mitigation is always changing in order to address new challenges within the economy. Because of a tremendous loss of jobs in some areas, property values have steadily declined.
A new loss mitigation tool that some innovative lenders are using to address the new economy is called the short refinance. Remember that refinancing out of foreclosure is extremely difficult because of loan to value restrictions that may not be sufficient to pay off the existing mortgage and cover closing costs.
If the property value has decreased, certain lenders and investors may be willing to accept less money. You must agree to an in home inspection and provide the normal loss mitigation package for approval. The lender closes a new mortgage loan to pay off the mortgage that is in foreclosure. If you have a second mortgage lien, this lien holder is not included in this deal and will still have the same loan amount.
SHORT SALE Lenders are in the business of lending money not owning houses. The lender will allow you to sell the home to someone and accept far less than what you currently owe on the mortgage. This is also called a short payoff because the lender agrees to cancel the note and mortgage as a lien on the home. The lender may want to perform an in home inspection to determine the property's condition and value. Cooperation with this request by allowing access
All of these programs may not be right for everyone so you must evaluate your situation to decide which one will benefit you the most. For more information, visit syhuniversity.tk for a free copy of the loss mitigation book, How to Save Your Home.
Herbert Addison, JD is a former consumer law attorney and is President of Save Your Home, Inc., a nationally acclaimed loss mitigation firm located in Columbia, South Carolina. Mr. Addison and Michael Taylor, Sr. are co-authors of the book, How to Save Your Home, that teaches homeowners how to properly negotiate foreclosure alternatives with mortgage lenders. Mr. Addison has also been published in Service Managment, the leading default management magazine to the mortgag servicing industry. He can be reached at 877-212-1880. His business websites include syhuniversity.tk; contacttheexpert.tk and saveyourhome.info Email: email@example.com.
Why You Need a Lender to Sell Your Home
Home sellers who are prepared to help buyers find financing will sell their homes faster, and for a larger selling price. Think about your potential buyers: some of them will have already arranged for financing, but many don't know how to buy a house.
First-time Home Buyers - 100% Home Loans
There is an increasing trend in South Africa that is seeing youths entering property market at a much earlier age. These youths are mostly first-time home buyers, applying for their first home loan, who have been renting for a short while and feel the need to invest in a property of their own.
Relocation Humor: Why I Bought A House
The Rental Experience in South FloridaReaders: This is based on a true experience -- only slightly exaggerated -- part of my life of adventure.If I had read my own book, Making the Big Move, and followed my own advice, none of this would have happened! A word to the wise .
The Ultimate Short Sale Secret
Buying foreclosures can be extremely profitable for real estate investors. However, most of these homeowners are mortgaged to the hilt.
Buy or Sell First?
When it comes to home buying, the ideal situation would be to find a new home, just as you receive an offer on your existing home. You would then be able to close concurrently and move into your new home a few days prior to closing on your previous home.
Finding a Great Listing Agent for Your Home: 8 Tips
If you've decided to list your home, you'll be paying a real estate agent a significant amount of money to the hard work of selling your home. Therefore, you have the right to expect prompt attention, good service, and protection.
Finding Structural Problems During Escrow - Upscale Home Example
When buying and selling homes, the property purchase is often subject to a satisfactory home inspection being done. Now and then, a home inspection uncovers severe structural problems.
FSBO: For Sale By Owners Chapter Two
Sheriff's Deputy Ted Rasmussen was thinking about Carrie-his pregnant waitress problem-when he sighted the traffic disruption meandering near the yellow line on Bay Street. A Bremerton merchant had called the Sheriff's emergency number reporting a wet morning commuter mess.
Fixer Uppers: Dont Make This Mistake
Making money with "fixer-uppers" isn't about repairing drywall or planting flowers. It's about using the right approach from the start.
Selling Houses: The Basics of Design Psychology
I'm often asked about the basics of Design Psychology, which offers innovative interior and exterior design ideas for increasing profit and shortening market time. In reply, I begin by saying that Design Psychology's strategies go well beyond normal cleaning, painting, and repair.
Selling Your Home - Alone or with a Broker?
How do you decide whether to sell your home (or land, farm, ranch, etc.) on your own or use a real estate broker? There are pluses and minuses to each approach.
Renting Versus Buying A Home
Renters are often in a quandary as to whether it makes sense to continue renting or buy a home. Buying a home makes more sense, particularly when taking a long-term view.
Salt Lake City Real Estate
From the mountains to the valley, there are many types of Salt Lake City real estate to choose from.Cabins:Cabins nestled into the mountains on the east side of the Salt Lake Valley are a great place to escape for those who have a home in the valley (or nearby).
10 Top Considerations For Those Buying Property Abroad
Are you one of a growing number of people considering buying a second home in the sun, an idyllic home from home abroad or a lucrative investment property overseas? If so you're not alone! Statistics show that globally we're all on the move with a recent survey by YouGov revealing that 55% of adult Britons were "seriously considering settling in another country" and the British Centre for Future Studies predicting that by 2020 one tenth of the current British population will be living or working abroad!Add to this the fact that there was a 250% increase between 2000 and 2004 in the number of Britons buying property abroad solely for investment purposes, that over one and a quarter million Brits own second homes in Spain and France already and that the Office for National Statistics in the UK recently revealed that 200,000 Britons go overseas yearly with the intention of remaining for at least twelve months, and you can see that the passion for buying that dream home abroad is universal.But what's fuelling this ever growing interest in the overseas property market?Well, despite reports to the contrary the UK housing market is seemingly ever on the up and those Britons who're acquiring massive levels of equity through their residential property are considering selling up, buying abroad and establishing a pension fund simply on the back of what they have left over from their house sale.
10 Things You Shouldnt Do When Youre Buying a Home
Home Buying Don'tsYour home buying process is well underway. The sellers accepted your offer to purchase.
Purchasing Property With No Money Down: My Personal Experience
Have you ever seen those infomercials about buying houses with "No Money Down?" They are really well done. They have all kinds of people offering great testimonials about how they have gotten rich, buying rental properties, with absolutely no money out of their pocket.
Real Estate Problem Solver
IntroductionThere are many areas one can invest in. Since I was 15 years old I have looked for the fastest, most effective way to accumulate a lot of wealth, with the least amount of risk.
How To Buy Property in Spain Safely
Buying property abroad is not an undertaking one should embark upon lightly! It is not wise to assume that the entire purchase process will follow the rules we're used to 'back home' and generally speaking there are usually a whole new set of rules and regulations, traditions and traps to learn, understand and watch out for.Spain is absolutely no exception and has a tangled web of laws and legislation seemingly designed to trip up an unwary real estate buyer.
Home Not Selling In Todays Hot Market? Tips and Ideas to Help You Sell
So, your selling your home. Prepare yourself both physically and mentally for the agony of the endless phone calls and interruptions to your daily schedule.
Equity is the value of your home minus what you owe on your mortgage. For example, If Joe's home is worth $200,000 and Joe still owes $170,000, then Joe's Equity is $30,000.
|home | site map|