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AVOIDING FORECLOSURES
Sylvia is certified for HAFA Short Sale by NAR.
One of the things I love to do recently is to help my clients Avoid Foreclosures - I love to sell their homes when the situation is right for them, rather than when they have no choice.
Helping my clients avoid foreclosures has been one of my biggest and most satisfying accomplishments in this dire economy - see Testimonials.
TIME IS OF ESSENCE
(This is Very Important - Call and get things started AS SOON AS you think you are in trouble ... It can be impossible to postpone foreclosure if you wait too long!)
If your financial situation has changed and/or if you anticipate your interest rate(s) will adjust upwardly where you will not be able to meet your mortgage obligation, the first thing to do is to call your lenders (or, if you like, call me to walk you through this.)
Time is of Critical Importance when dealing with possible defaults on your loans.
As honest, responsible citizens, we never anticipated not being able to live up to our promises. However, unexpected events can happen, the current economy crisis is certainly one of the biggest problems we are facing now; and when you know you are going to have problem meeting your obligations, you should not delay calling your lenders to start resolving this!
Don't put it off, be embarrassedd or ignore letters from your lender because the consequences can be much bigger - You do not want the Foreclosure proceedings to start and the clock to start clicking.
Depending on your particular situation and hardship circumstances, here are some options your lender might propose to you:
LOAN MODIFICATION
FORBERANCE - CATCHING UP ON LATE PAYMETNS
Lenders might agree to wait before taking legal action against you and let you work out a repayment plan that is affordable for you. This is called forbearance.
FORGIVING LATE PAYMENTS
If you can agree on a way that you will be current after missing a payment or two (without the means to pay it back), the lender might give you a break and waive your obligation. This is called debt forgiveness, and it rarely happens.
REPAYMENT PLAN
Lenders might allow you to add payments each month to your current payments to catch up on the defaults until you catch up on all late payments. This is called a repayment plan.
CHANGING LOAN TERMS
If your mortgage is an adjustable loan, the lender might freeze the interest rate before it increases or change the interest rate to a more manageable rate for you. A lender might also extend the amortization period. This is called a note modification.
ADDING BACK PAYMENT TO THE LOAN
If you have sufficient equity and meet the lender's lending guidelines, the lender might increase your loan balance to include the back payments and re-amortize the loan. This is called a refinance.
MAKING A SEPARATE LOAN
Certain government loans contain provisions that let borrowers who meet specific criteria apply for another loan, which will pay back the missed payments. This is called a partial claim.
HOW TO STOP FORECLOSURES
When the lender files a Notice of Default, your options are limited. That is why it is better for you to call your lender before falling behind on your payments, because lenders are often reluctant to work out repayment schedules after foreclosure proceedings have been commenced.
You will be given a certain time period to bring the payments current, pay the costs of filing the foreclosure and stop the foreclosure. This is called reinstatement of your loan. If you cannot make up the missed payments and the lender will not work with you, here are a few other options to stop foreclosure:
SELL YOUR HOME
Interview real estate agents to get an opinion of market value and average DOM to sell your home. You might be tempted to hire a discount broker, but many sellers feel they need the exposure and marketing that full-service brokers offer. Compare both to determine which best meets your needs and time frame.
CONSIDER SHORT SALE
If your home is worth less than the amount you owe, you might be a candidate for a short sale. A short sale affects credit but it's not as bad as a foreclosure. You or your agent will need to negotiate with your lender to find out if the lender will cooperate on a short sale. This is called a pre-foreclosure redeemed.
SIGN A DEED-IN-LIEU FORECLOSURES
This is called deeding the home back to the lender. The homeowner give the lender a properly prepared and notarized deed, and the lender forgives the mortgage, effectively canceling the foreclosure action. Lenders tell me that deeds-in-lieu of foreclosure affect credit the same as a foreclosure.
The lender might also work an arrangement where a home owner can remain in the home until finding a place to move into. Owners in default should negotiate the right to retain occupancy, arguing that if the lender followed through on the foreclosure, an owner would still enjoy the right of possession during that procedure.
INVESTIGATE AND UDNERSTAND YOUR OPTIONS!
However, this is a usually less desirable solution than the short sale - check with your lenders on the effects of short sale vs Deed-In-Lieu vs Foreclosure - Each choice affects important issues such as credit score, years on record, years before you can purchase another home, whether you will have to sign a note for the loss the lenders take, etc. Make sure you investigate and udnerstand your options and consequences fully.
Questions? Please contact Sylvia (415) 717-0293 or email Sylvia Barry immediately!
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