You’ve had more than your share of difficulties in the last few months. You’ve lost a loved one or been through a difficult divorce. You’ve lost a job or had to change jobs. You’ve lost your health and have medical expenses stacking up. Maybe you’re struggling with increased utility prices or fuel expenses or an adjustable rate mortgage (ARM) that is unbearable. Perhaps, your property tax bill has gone through the roof.
Unfortunately, while you’re worrying about stopping foreclosure of your home, you’re bombarded with letters, postcards, phone calls and strangers driving by and knocking on your door. These foreclosure investors specialize in chasing homeowners just like you who are close to losing their homes. They’re interested in buying your home and profiting from it, because they believe you must sell the home.
Should you sell to an investor to avoid being foreclosed on?
Maybe, but certainly not as your first option. And only after you exhausted other foreclosure prevention means such as rearranging your loan.
Rearrange Your Loan To Stop Foreclosure
Once you missed a few payments, your credit report will reflect them, and your credit score will drop dramatically. This low credit score will likely prevent you from being able to get a new loan to refinance your current loan in default.
Every mortgage lender in the country has a Loss Mitigation department established with the sole purpose of reducing lender’s losses on loans. They work to put homeowners who fell behind on payments on a repayment plan to bring your loan out of default. The best thing about Loss Mitigation alternative is, unlike a new loan, it doesn’t require a credit approval.
If You Do Get a Workout Plan, Beware of the Challenges
Loss Mitigation departments are lightly staffed. One of the biggest problems with workout plans is caused by employee overload. At time of high default rates, like we’re experiencing now, the employees have too many files to work on. And they have a limited time to process each case. The result is, the lender offers you a ‘canned’ repayment plan that has too short of a ‘catch up’ time and too large of monthly payment increase that is not realistic for your budget to sustain.
Because you’re between a rock and a hard place you’re tempted to take it to keep your home from being foreclosed on. In reality you just set yourself up for a failure. A few months down the stretch, you’ll be back in foreclosure again.
How to Hire Foreclosure Workout Professionals
One of the simplest, yet little known ways to get a lot better outcome through the Loss Mitigation process is to hire an experienced professional to do the work for you. These are companies that have experience of negotiating literally thousands of workout cases for owners in default. Some have established working relationships with the Loss Mitigation departments of many mortgage lenders nationwide.
They’ll review your finances with you to come up with a realistic repayment plan that’ll give you a lot more time and keep your payments at a comfortable level to assure your successful completion of the plan. They have insider’s information about variety of programs a given lender may have. In some cases they may be able to negotiate an interest reduction to lower your loan payments.
You may think in you current circumstances hiring a company like this could be prohibitively expensive. Not so. Most charge a reasonable flat fee equal to a single monthly mortgage payment. You’ll easily get your money back through a negotiated for you deferral of the next loan payment.
How to Cut Your Losses if Loss Mitigation is Not in Your Plans
If Loss Mitigation isn’t in your plans, then it’s time to sell your home so you don’t have a foreclosure record on your credit. If you have a lot of time before the foreclosure sale, then list your home for sale with a real estate agent. This way you will get more for your property. If you’re out of time, now you may have to turn to investment companies that can buy quickly. Just make sure you’re dealing with a company that has means and a track record to perform and close the purchase fast.
Leading national foreclosure prevention expert Alex Gurevich has contributed to helping thousands of homeowners just like you save their homes and avoid foreclosure with a 97% success rate. For a referral to a reputable Loss Mitigation professional or an investment company that can buy your home and put you in control of your finances fast visit http://www.SaveMyHome.com
Article Source: http://EzineArticles.com
Tuesday, September 25, 2007
Monday, September 24, 2007
THE SHORT SALE
For some home owners, selling your home is actually the relief that you need. After reviewing your financial portfolio, it may become obvious that you can no longer afford your home. Many owners have often realized this and tried unsuccessfully for months to sell their home through traditional real estate methods.
But, because of market fluctuations and changes beyond your control, sometimes your home may not sell at the anticipated full price of your loan. A 'Short Sale' allows you to sell your home to a third party at a price which is less than the total amount that you owe.
What is a Short Sale?
A 'Short Sale' occurs when a property is sold to avoid a possible Foreclosure auction or bankruptcy. And the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed. It is also known as a 'Shorted Sale.' For example, a homeowner who is facing Foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a 'Short Sale.'
Why are they willing to take such a discount?
Several reasons. First of all, banks do not like excess inventory and bad loans on their books. Therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all. Read more...
But, because of market fluctuations and changes beyond your control, sometimes your home may not sell at the anticipated full price of your loan. A 'Short Sale' allows you to sell your home to a third party at a price which is less than the total amount that you owe.
What is a Short Sale?
A 'Short Sale' occurs when a property is sold to avoid a possible Foreclosure auction or bankruptcy. And the lender agrees to accept a discounted payoff, meaning the lender will release the lien that is secured to the property upon receipt of less money than is actually owed. It is also known as a 'Shorted Sale.' For example, a homeowner who is facing Foreclosure, has an existing first mortgage of $300,000. You write an offer to the lender for $220,000, which is accepted as full payment for the loan. This is a 'Short Sale.'
Why are they willing to take such a discount?
Several reasons. First of all, banks do not like excess inventory and bad loans on their books. Therefore, if they see an opportunity where they can sell the property without a huge loss, they will do it. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all. Read more...
Sunday, September 23, 2007
How to Stop a Home Foreclosure Sale
The key to stopping foreclosure starts with the timing of the initial debtor action. It may seem like a ridiculous thing to even mention, but the most common cause of losing your home results from waiting too long to respond to a foreclosure notice or not reacting at all. Contrary to popular belief, there are dozens of ways to save a house from foreclosure.
When starting from prior to missing a mortgage payment all methods in this article may potentially save the home. As the foreclosure auction date comes closer, options continually become unavailable until only a bankruptcy remains. Below you will find many of the most common methods to avoid foreclosure. Most ways to stop a foreclosure come up as subcategories of these main groups:
Foreclosure Workouts
Let’s broadly define a foreclosure workout as any arrangement negotiated with a creditor outside of the original terms of the loan. This method allows all parties to make the most of a bad situation and therefore it’s favored over the other options when possible. A foreclosure workout on property may take one of the following forms:
Short Pay or Short Refinance
In most situations people accomplish this through a refinance of the property facing foreclosure. Example: The debtor owes $100,000 on their mortgage with another $15,000 in arrearage and legal fees. Someone negotiates for the loan to be settled for $80,000 and arranges a new loan for $85,000 to cover paying off the original bank and all associated transaction fees. The debtor has now avoided the foreclosure and eliminated $30,000 of debt. Sometimes a friend, relative or investor buys or pays off the mortgage from the creditor. Another way to make this work may be to negotiate as outlined here but instead of finding a foreclosure loan to cover both the settlement and the legal fees find the best loan you can and have friends or family make up the difference. at a discount
Modify The Existing Mortgage
In simple terms, the creditor, usually a bank, agrees to change the terms of the loan. Most often the changes are temporary. Reducing the interest rate, principal portions of payments, or extending the amortization in an effort to reduce overall payment obligations, remain the changes most acceptable to creditors. Unless the delinquency remains small with a loan at a local bank or the debtor has a nasty hardship under a government program this can be a tough plan to get through the creditor’s guidelines. Often a professional foreclosure negotiator can get these plans approved even when the debtor cannot.
Repayment plan
Easy to understand, easy for creditor acceptance. The debtor pays a portion of the arrearage and agrees to pay the rest in addition to the regular payment over a period of months. With proof of the income and the proper down payment, most lenders will accept this type of plan all day. Expect half of the arrearage plus its legal fees get paid up front with a promise to pay the rest of the arrearage in addition to the regular payment within six months. Plans with less down and paid over a longer period of time can be negotiated by loss mitigation professionals.
Deed in lieu of foreclosure
Here the debtor gives the property back to the creditor usually in exchange for their forgiveness of potential deficiencies. Do not think this happens with some negotiation by you or a foreclosure professional. Even if you give the house back or the bank takes it at a foreclosure auction you may will owe the deficiency. This amount will be the difference between what the house sold for at the foreclosure sale and what you owe including the legal fees. While the deficiency can be settled without paying any of it, this must be agreed to and certainly does not happen automatically in most states.
Short Sale
The property sells to a third party; the creditor accepts this price as full settlement of the debt if it is negotiated that way. Beware of the bank attempting to take a short sale and ask for a deficiency too. In cases where the owners being foreclosed on have many other assets there may be no way out of the foreclosure deficiency.
Friendly Foreclosure
The creditor or a friendly third party that has bought the mortgage sells the property at foreclosure to clean the title of other lien holders. Later the property sells back to the debtor or another predetermined entity.
Repurchase After Foreclosure
Just as it says, buy back a foreclosed property after the auction.
Forbearance
In exchange for money or the debtor taking some other action (perhaps listing the property with a realtor or making repairs) the creditor agrees to temporarily cease legal actions.
Bankruptcy
Filing for Chapter 7 or Chapter 13 bankruptcy protection sometimes paves the best path for debtors to retain their houses and deal with their creditors. Advantages of bankruptcy include the debtor’s ability to stop foreclosure without creditor acceptance and encompassing more than just the mortgage debt with a single action. If bankruptcy emerges as our first recommendation, your personal circumstances must be well suited for this option. In most cases bankruptcy comes as a last resort. While you may file bankruptcy on your own, you will almost always be better served to hire a qualified, experienced bankruptcy attorney.
In Chapter 7 all nonexempt assets are turned over to the bankruptcy trustee and debts discharged. Exemptions vary by state. In most cases the debtors possess so few assets that they may keep everything and have all of their debts wiped out completely. If a chapter 7 will not yield this result it may not be the best option. In Chapter 13 a plan outlines how the debtor will pay creditors over a three to five year period. Only a Chapter 13 can stop a creditor from foreclosing on a delinquent debtor over a period of years. Under a chapter 13 the court retains the right to scrutinize finances of the debtor for the life of the reorganization plan. For a Chapter 13 to work payments under the plan must be kept up or the court protection will evaporate and the house will go to foreclosure.
Full Payoff Refinance
Borrow enough money on a new mortgage to pay off the balance on the old mortgage including arrearage and legal fees. This happens more often then one might guess. If the debtor has enough equity in the house, bad credit will not stop them from getting a new loan.
Full Re-Instatement
It doesn’t get easier than this, find out how much arrearage is owed and pay it in full. If a debtor could do this they probably wouldn’t be reading this, but just in case, know it exists as an option. In fact, most state laws grant the home owner the absolute right to re-instate before the foreclosure and require that the bank accept the full re-instatement and stop the foreclosure. Unless a creditor gives a debtor a hard time, they should not need outside help on this option.
Give Up the Property
Too often people refuse to examine this as an option. The problem may be that the homeowner cannot afford to stay where they are. If the debtor will not be able to keep the house in the long run it may not be advisable to throw a lot of money into a futile effort to save it from foreclosure just for the short run. Any cash available may serve them better if put towards a new place to live. If you owe more than the house is worth, look at a deed in lieu of foreclosure as described above.
Terms can be negotiated with the creditor for debtors to stay in the house as long as possible before moving. Where debtors have equity in the house, try to arrange preserving it by selling it prior to foreclosure. In some cases other equity preservation strategies may be used when foreclosure cannot be avoided.
For more details about stopping a Foreclosure Sale
Visit: You-Can-Stop-Foreclosure.com
When starting from prior to missing a mortgage payment all methods in this article may potentially save the home. As the foreclosure auction date comes closer, options continually become unavailable until only a bankruptcy remains. Below you will find many of the most common methods to avoid foreclosure. Most ways to stop a foreclosure come up as subcategories of these main groups:
Foreclosure Workouts
Let’s broadly define a foreclosure workout as any arrangement negotiated with a creditor outside of the original terms of the loan. This method allows all parties to make the most of a bad situation and therefore it’s favored over the other options when possible. A foreclosure workout on property may take one of the following forms:
Short Pay or Short Refinance
In most situations people accomplish this through a refinance of the property facing foreclosure. Example: The debtor owes $100,000 on their mortgage with another $15,000 in arrearage and legal fees. Someone negotiates for the loan to be settled for $80,000 and arranges a new loan for $85,000 to cover paying off the original bank and all associated transaction fees. The debtor has now avoided the foreclosure and eliminated $30,000 of debt. Sometimes a friend, relative or investor buys or pays off the mortgage from the creditor. Another way to make this work may be to negotiate as outlined here but instead of finding a foreclosure loan to cover both the settlement and the legal fees find the best loan you can and have friends or family make up the difference. at a discount
Modify The Existing Mortgage
In simple terms, the creditor, usually a bank, agrees to change the terms of the loan. Most often the changes are temporary. Reducing the interest rate, principal portions of payments, or extending the amortization in an effort to reduce overall payment obligations, remain the changes most acceptable to creditors. Unless the delinquency remains small with a loan at a local bank or the debtor has a nasty hardship under a government program this can be a tough plan to get through the creditor’s guidelines. Often a professional foreclosure negotiator can get these plans approved even when the debtor cannot.
Repayment plan
Easy to understand, easy for creditor acceptance. The debtor pays a portion of the arrearage and agrees to pay the rest in addition to the regular payment over a period of months. With proof of the income and the proper down payment, most lenders will accept this type of plan all day. Expect half of the arrearage plus its legal fees get paid up front with a promise to pay the rest of the arrearage in addition to the regular payment within six months. Plans with less down and paid over a longer period of time can be negotiated by loss mitigation professionals.
Deed in lieu of foreclosure
Here the debtor gives the property back to the creditor usually in exchange for their forgiveness of potential deficiencies. Do not think this happens with some negotiation by you or a foreclosure professional. Even if you give the house back or the bank takes it at a foreclosure auction you may will owe the deficiency. This amount will be the difference between what the house sold for at the foreclosure sale and what you owe including the legal fees. While the deficiency can be settled without paying any of it, this must be agreed to and certainly does not happen automatically in most states.
Short Sale
The property sells to a third party; the creditor accepts this price as full settlement of the debt if it is negotiated that way. Beware of the bank attempting to take a short sale and ask for a deficiency too. In cases where the owners being foreclosed on have many other assets there may be no way out of the foreclosure deficiency.
Friendly Foreclosure
The creditor or a friendly third party that has bought the mortgage sells the property at foreclosure to clean the title of other lien holders. Later the property sells back to the debtor or another predetermined entity.
Repurchase After Foreclosure
Just as it says, buy back a foreclosed property after the auction.
Forbearance
In exchange for money or the debtor taking some other action (perhaps listing the property with a realtor or making repairs) the creditor agrees to temporarily cease legal actions.
Bankruptcy
Filing for Chapter 7 or Chapter 13 bankruptcy protection sometimes paves the best path for debtors to retain their houses and deal with their creditors. Advantages of bankruptcy include the debtor’s ability to stop foreclosure without creditor acceptance and encompassing more than just the mortgage debt with a single action. If bankruptcy emerges as our first recommendation, your personal circumstances must be well suited for this option. In most cases bankruptcy comes as a last resort. While you may file bankruptcy on your own, you will almost always be better served to hire a qualified, experienced bankruptcy attorney.
In Chapter 7 all nonexempt assets are turned over to the bankruptcy trustee and debts discharged. Exemptions vary by state. In most cases the debtors possess so few assets that they may keep everything and have all of their debts wiped out completely. If a chapter 7 will not yield this result it may not be the best option. In Chapter 13 a plan outlines how the debtor will pay creditors over a three to five year period. Only a Chapter 13 can stop a creditor from foreclosing on a delinquent debtor over a period of years. Under a chapter 13 the court retains the right to scrutinize finances of the debtor for the life of the reorganization plan. For a Chapter 13 to work payments under the plan must be kept up or the court protection will evaporate and the house will go to foreclosure.
Full Payoff Refinance
Borrow enough money on a new mortgage to pay off the balance on the old mortgage including arrearage and legal fees. This happens more often then one might guess. If the debtor has enough equity in the house, bad credit will not stop them from getting a new loan.
Full Re-Instatement
It doesn’t get easier than this, find out how much arrearage is owed and pay it in full. If a debtor could do this they probably wouldn’t be reading this, but just in case, know it exists as an option. In fact, most state laws grant the home owner the absolute right to re-instate before the foreclosure and require that the bank accept the full re-instatement and stop the foreclosure. Unless a creditor gives a debtor a hard time, they should not need outside help on this option.
Give Up the Property
Too often people refuse to examine this as an option. The problem may be that the homeowner cannot afford to stay where they are. If the debtor will not be able to keep the house in the long run it may not be advisable to throw a lot of money into a futile effort to save it from foreclosure just for the short run. Any cash available may serve them better if put towards a new place to live. If you owe more than the house is worth, look at a deed in lieu of foreclosure as described above.
Terms can be negotiated with the creditor for debtors to stay in the house as long as possible before moving. Where debtors have equity in the house, try to arrange preserving it by selling it prior to foreclosure. In some cases other equity preservation strategies may be used when foreclosure cannot be avoided.
For more details about stopping a Foreclosure Sale
Visit: You-Can-Stop-Foreclosure.com
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