If you or if you know of anyone who is facing the threat of foreclosure should carefully consider every option available before allowing their lender to auction your or their home.

We’ve helped many people – good people in situations just like yours – to avoid foreclosure.

The reasons for foreclosure are many: 

• Job loss or demotion
• Death in the family
• Divorce
• Adjustable rate interest increases
• Unexpected, costly repairs
• The list goes on and on
  

If you’ve found yourself in one of these situations, wondering how to stop foreclosure. We specialize in foreclosure prevention, tell us a little about your situation and we will craft a custom solution to your needs. Contact us now! We can help.

Know Your Options

Option 1: Loan Forbearance or Modification – A strategy worth pursuing is called loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period. A typical example – You owe $9,000 in back payments, attorney’s fees, etc… Your mortgage company may accept $4,500 now and $750 per month for the next 6 months in addition to your current monthly mortgage payment. A loan modification is a permanent change to our mortgage that may lower your payments and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the mortgage company filing a foreclosure lawsuit. Some lenders will not consider this after filing, but its worth trying.

Option 2: Reinstate Your Mortgage – You have up to and including the morning of the auction to catch up your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. You may be able to arrange a second mortgage to catch up the back payments and fees. Check the Yellow Pages under “Mortgages”. There are a number of companies listed that claim they can help in these situations, but do be very cautious about paying fees in advance of these companies’ services.

Option 3: Refinance – You’ve probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that it is very difficult to arrange new financing when you’re already in default on your existing mortgage. Be very cautious about sending advanced fees of $300 to $700 to lenders or mortgage brokers. Usually it’s a ploy to take advantage of your financial situation. Arranging new financing will depend on your income, credit report, value of your home and the amount of your equity. If you attempt to refinance, you should always have a backup plan available to you. Many times, we have had homeowners call days before the auction saying their financing did not go through, and then it’s too late!  This is only after repeated promises by the lender that “everything will workout”.

Option 4: Chapter 13 Bankruptcy – A viable alternative if your financial situation has improved, filing bankruptcy prior to the auction will stop the sale. Unfortunately for most people, it only postpones the sale for one or 2 months. Immediately after filling a Chapter 13 Bankruptcy, you will have to file a repayment plan with the courts. This plan has to show that you have sufficient monthly income to pay basic living expenses such as food and utilities and other monthly payments such as credit cards, car payments, etc…  In addition your income must be sufficient to resume making our monthly mortgage payments. All past due amounts are usually spread out between 24 and 60 months, i.e.: If you owe $9,000 in missed payments, attorneys fees, etc… if spread out over 48 months would be an additional $187.50 due each month to the court appointed trustee. If you feel as though you have the income to immediately begin repayment of all your debts and the courts agree, this may be a good choice for you to save your home.  Over the years, we’ve spoken with many individuals who filed for bankruptcy protection only to have their cases dismissed.  Not only were they out their attorney’s fees (usually $700 – $1800) but now had a bankruptcy and foreclosure on their credit report. Bankruptcy is considered an action of last resort.

Option 5: Sell Your Home on the Open Market – This is probably the most under utilized option available to you. The fact is selling your home will give you the money in your pocket. The market is very active and we’ve all experienced significant appreciation in the past few years. Your home may be worth a lot more than you think. If you have recently been served with a foreclosure lawsuit you still have enough time to sell your home which will provide you and your family the greatest amount of money to help provide a fresh start for you and your family. Please keep in mind that the typical real estate transaction takes an average of 30 days. Don’t procrastinate; explore all the options available to you.  If saving your house seems unlikely, you should call us as soon as possible! Placing your home on the market a few weeks or a month from now may not give us enough time to find the buyer, arrange financing, and schedule the closing. Because of the time sensitive nature of your situation, this is not a time to go it alone as a “for sale by owner” or list your home with a friend or friend of a friend.

Option 6: We Can Buy Your Home – If efforts to save your home have been unsuccessful and time doesn’t permit selling your home on the open market or you just don’t want to, but want a quick sale with no problems, call us. We’ll make you an offer and close quickly.  In the case of foreclosure, selling the property is the best solution for a home owner or use a creative strategy to keep the property out of foreclosure. This will allow you to, in a sense, start over and secure a better, more affordable housing opportunity. Thus, allowing you to stop a bankruptcy and/or foreclosure from being reported on your credit report.

Option 7: Let Your Home Be Sold On the Courthouse Steps – By far the worst option available to you! Many people feel “I have no equity, let the bank take it”, but homes that are sold on the courthouse steps typically sell between 50% and 70% of their fair market value. Moreover, if a bank suffers a loss due to the pending foreclosure action against you, they also have an option. They can file a deficiency judgment against you long after the house has been resold, even if you did a short sale and pursue you for the amount of their loss. ( Banks suing homeowners was almost unheard of but due to the shear number of foreclosures and losses, they are now exercising the deficiency clause in the contract.) Typically ten days after the foreclosure auction, a certificate of title will be issued by the courts to the new owner. If you have not voluntarily vacated your house at this time, you could be forced to move out in a very short period of time. TIME IS OF THE ESSENCE! Contact us now

As with any serious legal situation the reader is encouraged to consult legal counsel regarding any points of law. This information should not be used as a substitute for competent legal advice. If you own property facing foreclosure and are interested in options 6 (Sell your house,) we have the capability for a quick private closing without the hassles of listing the property or completing possible repairs.  Contact us now