Monday, October 27, 2008

Foreclosure Myths

Myth: The bank wants your house
Truth: The bank almost never wants your house, they want the money they lent you paid back with interest. In fact, banks usually hate going through the foreclosure process and will bend over backwards to work with homeowners in avoiding a foreclosure. Often the bank's flexibility still doesn't go far enough in stopping the home foreclosure. Never confuse that with the bank "wanting" your house. Treating the bank with contempt or completely avoiding them because you think they "want" your house may only serve to hasten the result that neither of you want, that they "get" your house.

Myth: The bank will not take my payments, I can do nothing else
Truth: At some point many banks say if you do not pay all of your arrears in full they will not accept a partial payment. Maybe a month later you get that figure together only to find the bank sends it back because another month has gone by and now the "all or nothing" requirement has grown. Do not fear! If you and the bank can not get together on a solution for stopping foreclosure a mortgage negotiation professional can set up a plan for you to pay just a portion of the arrears now if along with the partial mortgage arrears payments you set a plan to pay future current payments and catch up on the remaining arrears over time, sometimes months, sometimes the life of the balance of the loan or extending the loan. The foreclosure process stops and as long as you stick to the plan you keep the home. Don't miss a payment under the new plan or the foreclosure process can pick up where it left off and banks rarely give second chances with this type of plan for avoiding foreclosure. If this fails you may still have the option of a Chapter 13 bankruptcy to save the house from foreclosure. Don't forget when the bank stops accepting your mortgage payments do not spend all your money elsewhere, you will need it to save the house. Read more on this at "Who to pay when you can't pay everyone".

Myth: I received a foreclosure notice; I have to move out now
Truth: Most states have a very long foreclosure process, even after failure avoiding foreclosure you do not have to move. Following a foreclosure you must go through an eviction hearing. Eventually you will be physically removed. I'm not suggesting you hold out until the end, but making sure you know you get to stay and fight if you want. Time can be on your side if you take action early and don't waste the opportunities for stopping the house foreclosure.

Myth: I'm in foreclosure, no bank will refinance me out of this foreclosure
Truth: If you have enough equity in your home, typically 60%-70%, specialty lenders will refinance the house to pay off the old bank and stop the foreclosure.

Myth: If I go through a foreclosure I can never buy a house again
Truth: From a banking point of view foreclosures can be viewed as one of the worst things ever on a credit report. Even so, some banks will make you a loan very soon after a foreclosure. Be prepared for very large down payments and high interest rates. Most often the terms of these loans prevent people from buying another house not that funding does not exist. In time provided you work hard to rebuild your credit you can go to a bank almost as if the foreclosure never happened, although expect that may take 4-7 years. Click here for an article about bad credit mortgages or applications for loans after foreclosure.

Myth: On the foreclosure auction day everyone in the world is going to invade my house
Truth: While some foreclosure sales may be held "at" the property no one will come inside unless you invite them.

Myth: A chapter 7 bankruptcy will stop my foreclosure and save the house
Truth: A chapter 7 bankruptcy will stop the home foreclosure on a temporary basis only. Eventually you need to do something else to keep the house in the long run if you are facing foreclosure.

Myth: Homeowners can come up with all sorts of creative ideas for stopping home foreclosure and the bank will go along with the smart plans
Truth: Bank's organizations in most cases involve complex bureaucracies and specific procedures. Most times the smartest plans remain destined for rejection. Stick to a plan within formats and parameters the bank works with everyday for avoiding foreclosure, get a professional to help you if needed.

Myth: Even if I get together all of the money I owe the bank once I'm deep into the foreclosure process it's too late
Truth:
In most states if you have all of the money you owe the bank for back payments and legal fees, late fees etc, they have to take it and stop the foreclosure. It is not their choice it is the law, but where it applies you need to catch up "in full".

Myth: I'm getting foreclosed on and I'm going to go to jail
Truth: You may lose your house, but you don't go to jail for not paying the mortgage.

Myth: I have to do everything I can to save the house and continue to live in it
Truth: Sometimes people need to move on or in some cases they just hate the house and have have no desire to save it. The whole foreclosure procedure can be avoided with a "deed in lieu of foreclosure" negotiation where you and the bank agree to the terms for giving the house back to them in a less adversarial manner. In exchange they may forgive some of the money you owe and you'll have less heart ache. They agree to stopping the foreclsoure and you both walk away.

Myth: When the bank takes the house our dealings are done, they got the house back
Truth: In many states if the house sells for less than you owe them even after the foreclosure you will still owe them the amount of the "deficiency", meaning the difference between what they got and what you owed. They can still get interest on that too. If you think you will face a deficiency you should think harder about a deed in lieu of foreclosure where they will forgive it or a chapter 7 bankruptcy where it can be wiped out. See a chapter 7 bankruptcy attorney in your state if you have questions. Even in a deed in lieu of foreclosure situation you may still owe a deficiency unless you make sure as a part of the deed in lieu of foreclsoure negotiation that you do not.

Myth: I have not paid my mortgage in months and no one has contacted me. I think I can stay here forever and not pay anything
Truth: Sometimes, especially when banks or loans change hands, files get misplaced or there is a transition period where nothing happens. Eventually you will hear from the bank. You can not be successful stopping foreclsoure by avoiding the mortgage problems.

Myth: The bank can't expect ME to pay THEIR legal fees
Truth:
Oh, yes they do, and you will if you want to keep the house. Look in your mortgage documents, it's very clear. Don't expect it to be cheap either $2000-$5000 can be common.

Myth: When a judge hears my sad tale they will not kick me out
Truth: You may get more time, but you will only be stopping the action for a while, eventually you will go.

Myth: Once the foreclosure sale happens you can never get the house back
Truth: Sometimes this one is true, but in some states people have "redemption" rights where they can keep the house if they can pay the bank off in full, principal and arrears, within a limited time period. In other cases you can still buy it back after the foreclosure, but that remains a rare case.

Myth: The foreclosure date is too close, there is nothing I can do
Truth: Sometimes minutes before the foreclosure sale a Chapter 13 bankruptcy will stop the auction. Don't wait for things too get this close, but I have seen it done. You will be better served to have things prepared with a lawyer at least a week or two prior to the foreclosure date.

Myth: If I file a chapter 13 bankruptcy I get to keep the house automatically no matter what
Truth: If you file a chapter 13 bankruptcy AND you have a chapter 13 approved by the court AND you make ALL of the payments under the plan you can keep the house. Read more about Chapter 13 bankruptcy or finding a chapter 13 lawyer near you by clicking here.
Myth: When they foreclose on my house they take all my stuffTruth: You keep your personal property, but permanent attachments to the house should stay like light fixtures or a dish washer. Sometimes it gets tricky, but unless there is something of great value the bank expected was there and it is gone after the foreclosure it is rarely an issue. Don't turn it into an issue by taking everything including wall to wall carpets and radiators and toilets, which would insure trouble.

Myth: The bank messed up one of my payments and I have proof! They can't kick me out, in fact, I want to sue them and I'm going to collect big
Truth: People often focus on the wrong things, waste time and lose the main objective while focusing on the trivial details. If you owe the bank $10,000 and they say you owe them $10,500 even if you are right a $500 error will not mean anything in terms of a judge stopping the foreclosure or award significant money to you. Concentrate on stopping foreclosure by dealing with the $10,000 you admit you owe and deal with the $500 error as a secondary subject.

Myth: No one can help me in stopping my home foreclosure
Truth: Many methods and many professionals can help avoiding foreclsoure. Click here for an interactive form for help decide which method of stopping foreclosure fits your own personal home foreclosure situation.

Wednesday, October 22, 2008

Lenders Help More Homeowners Avoid Foreclosure

By Chris Taylor

The deep economic crisis has more lenders willing to change mortgages or repayment schedules for homeowners at risk of default, to stem their potential losses from foreclosures.

More than 3 million U.S. homeowners have received — or are expected to receive — more affordable loans through ongoing programs initiated over the last 15 months. But even outside the formal programs, says David Kittle, chairman-elect of the Mortgage Bankers Association, lenders are more willing now than a few months ago to agree to changes in monthly payments. In some areas that have a high number of subprime loans or foreclosures, he says, some lenders are even going door-to-door to contact homeowners.

"There's really no reluctance anymore," Kittle said. "Lenders lose $40,000 to $50,000 on every loan that goes into foreclosure."

Kathleen Day of consumer advocate Center for Responsible Lending says even with banks more willing to make modifications, additional help is needed. She also said door-to-door contact with late borrowers may be little more than a public relations ploy.

Some lenders had been reluctant to do loan work-outs because they may hold a large number of risky loans, and modifications carry their own costs to banks. Others simply lacked the staffing or internal programs for systematic loan reviews.

Signs of the shift:
• Mortgage servicers have modified existing mortgages or agreed to easier repayment plans, allowing 2.26 million homeowners to avoid foreclosure since July 2007, according to Hope Now, a private sector alliance of mortgage servicers, counselors and investors.
• As many as 400,000 homeowners may avoid foreclosure over the next three years under a program that started Oct. 1 through the Federal Housing Administration. The program, authorized by Congress in July, allows qualifying homeowners to refinance loans into a 30-year, fixed rate. The mortgage must have originated on or before Jan. 1, 2008.
•Nearly 400,000 homeowners will be able to get more affordable loans under an agreement this month by Bank of America with a number of state attorneys general to modify mortgages originated by Countrywide Financial, now owned by the bank.
Despite banks' forbearance, foreclosure filings are rising, according to the most recent reports. Foreclosure activity increased 12% in August from July and 27% from August 2007, according to industry watcher RealtyTrac. Last year saw 2.2 million foreclosure filings.

Bailout Bill May Help Borrowers

Homeowners at risk of foreclosure may benefit from provisions in the bailout bill designed to modify their mortgages.

The National Association of Realtors said it's pleased with many of the provisions in the revised "Rescue Package" because not only does it help troubled borrowers, but fewer foreclosures will help stimulate many housing markets that have been sagging for the past year.

As of right now it's not been determined which loans will be modified, but many supporters of the provision are hoping that a quick and efficient system is put into place in order to determine loan modification criteria on a large scale, rather than work on each loan case by case.

The plan requires the government to come up with a system to modify loans it acquires through the bailout plan. Changes might be multifarious: lengthening the loan, reducing interest rates or writing down some principal.

Also, borrowers who live in the home and whose loans meet certain criteria, can go into the "Hope for Homeowners" program that was setup during the last housing bill signed into law in July. This program provides the borrower to refinance into a fixed rate loan through the Federal Housing Administration.

The largest problem that still looms deals with the loans the government acquires that are packaged in securities and are no longer held by the originator of the loan, but a servicer. Not a great deal is known, lenders, servicers, and owners of distressed assets are waiting to find out more details as to how to solve the problem and what role the tax payers will play with respect to losses.

Overall, borrowers should engage with their lender, communicate on a regular basis as to their "current status". If the borrower doesn't have time to do this it would be in their best interest to contact a Loss Mitigation company. They can spend the time to reach and inform the lender as to their status. A Loss Mitigation specialist will help negotiate your interest rate with your lender and help you save your home.

Monday, October 20, 2008

American Foreclosure Specialists

We know what you're feeling. You've had more than your share of difficulties the last few months. The good news is that you are not alone. American Foreclosure Specialists can help. We understand that good people sometimes need a second chance. Most foreclosures are a result of an unexpected life event, such as:
  • Death in the Family
  • Difficult and costly Divorce
  • Lost a job or had to Change Jobs
Health problems with Expensive Medical Bills Maybe you're struggling with increased utility prices or fuel expenses or an adjustable rate mortgage (ARM) that is unbearable. Maybe you've already had to file bankruptcy or get a forbearance and the repayment plan is not working out. Maybe this is all a big mistake and the payments you've been sending were rerouted or lost because your mortgage has been sold or traded. Let us help you get back on track.

When Good People Need A Second Chance
Whatever the difficulty, we understand how it feels to choose between a mortgage payment or groceries. We understand what it's like to have continual phone calls from your lender ... calls at home, calls at work and letters in the mailbox.

You need to save your home but your Denver lender is asking for too much money. You're not asking for them to forgive the loan but you need help creating a payment plan that you can handle. You just need someone on your side to negotiate with your lender to get you back on track.

We have caring people who want to help you save your home and get you back to where you need to be. We want to help you get back in charge of your finances. Fore foreclosure assistance, contact SOS Home Mitigation today! (866) 767-4663

Friday, October 17, 2008

Foreclosure: Don't start packing your bags yet!

By: Chris Taylor
Foreclosure, one of the most difficult time anyone can endure. All one can think about is where am I going to live. Many people are falling behind on their loans. The main reasons are as follows: Loss of income and rising expenses. Loss of income can really be attributed to recent unemployment data, companies cutting back on overtime, and bonus income. Injuries, death and divorce are also common characteristics involved when a borrower cannot meet their mortgage payment.

Rising expenses, people have seen their fuel costs double, groceries and other staples increase throughout the recent years. We are seeing the mortgage payment actually increase by as much as 50%. Overall financial stress is bearing down on the homeowner and there is nowhere to turn to for help, until now.

Loss Mitigation or Loan Modification is where the borrower and lender come to a common solution to prevent foreclosure. The borrower can’t get a loan so why not work out a deal with their existing lender. We see borrowers who are current to one year behind on their mortgage. Good news is all of them are still in their house and working on a better situation than they are currently in. Many customers have their bags packed by the time we talk with them. We tell them to unpack and hunker down.

Borrowers usually have more options than they think to maintain homeownership, find out now what options are available to you.

Wednesday, October 15, 2008

Where to Turn for Foreclosure Assistance

Where to Turn for Foreclosure Assistance

Facing foreclosure can be a scary thing and most people do not know where to turn when it comes to foreclosure assistance.

It’s funny because the least likely place to look for foreclosure assistance is actually the first place you should look. The first thing you need to do is call your mortgage lender. Despite the popular belief, mortgage lenders do not want to posess your home. They are not in the real estate business and it costs them a lot of time and money not only to foreclose, but to sell the house after they acquire it in a foreclosure. No, mortgage lenders do not want your home, what they really want is their loans paid.

The reason you call your Denver mortgage lender first when you need help stopping foreclosure is that your mortgage lender holds your mortgage and may have several ways to assist you. Your Denver lender can decide to let you have more time to pay, agree to modify or change your mortgage payment terms, etc. Most mortgage lenders in Denver will work with you, but there is not requirement that they do that. Some of the lenders out there will not work with you for whatever reason. So you call your mortgage lender first to see if they can help you stop or avoid foreclosure.

Another source to look for foreclosure assistance is to check with several lawyers in your area. The reason for checking with several lawyers is that some lawyers are more helpful than others. And their fees will vary, some charge more than others. You will probably want to talk with a bankruptcy lawyer because bankruptcy lawyers deal with matters of stopping debt collection. A Denver lawyer can tell you your legal rights as well as explain to you the complete foreclosure process.

A third place to look for foreclosure help is the internet. However, you need to be careful. We have seen a number of websites claiming to be stop foreclosure specialists. I do not know of any government or private organization that certifies stop foreclosure specialists. I have also seen websites that claim to tell you the foreclosure law for your state. I know for a fact that some sites have not completely stated my state's foreclosure law and that by being incomplete, they may mislead website viewers. A lot of the information on the internet is good information, but you need to be careful. "If it sounds to good to be true, it probably isn't true".

Whether you look locally or on the internet for assistance in stopping foreclosure help, check several sources use your best judgment as to what is true and what is not true, and be sure of what the fees are before you have any individual or company take any action on your behalf. Be suspect of any individual or company that will not tell you up front what they can do for you to stop or avoid foreclosure.

It is important that you realize that you may have several options to stop or avoid foreclosure, but that not every option will work in every situation.

5 ways to Acquire Foreclosures

By Chris Taylor
In general, there are five basic ways to acquire foreclosures at discounted prices. All but one of them permit the buyer to pay for qualified assistance from other sources (such as a title and / or escrow company. Unfortunately, the most popular technique (buying properties at the trustee's sales) allows no such luxury. The purchasing process at the trustee's sale requires each buyer to make his own thorough investigation of both title and debt on the chosen property within a limited time frame.

Delinquent Seller
The first and simplest way to buy properties under the fair market value arises when the delinquent (not defaulted) owner is uncovered. The delinquent buyer will not have made recent payments of principal, interest, taxes or insurance and / or may have reduced the value of the property through benign negligence or lack of funds. When the delinquent owner realizes that he will be unable to meet the commitments on promissory notes and trust deeds for an extended period, he may choose to sell his property even at a discounted price rather than proceed through the foreclosure process. The wise buyer will point out to the delinquent (and later defaulted) owner how he will be harmed by proceeding through the brief foreclosure process to the trustee's sale. At that point, the owner will lose his property, lose his equity, reduce his credit standing as a result of the recorded foreclosure and may have taxable income due the IRS for the amount of the debt reduction (elimination of the trust deed debt) resulting from the trustee's sale. Selling to an interested buyer at a discounted price may well be the most convenient solution for the troubled, delinquent owner.

Defaulted Seller
The property owner becomes a defaulted owner when the trustee for the beneficiary records a Notice of Default. During the following three month plus three week periods, a Notice of Trustee's Sale also will be recorded and published in a local adjudicated newspaper once a week for three weeks just prior to the trustee's sale. Live-in buyers of the property of the defaulted owner may negotiate any reasonable purchase price and terms for the property with the defaulted owner. Investors who seek to purchase the primary residence of a defaulted owner of one to four units and who are not related to that owner must work with the equity seller under the restrictions of two California Civil Codes which can make such purchases more difficult. These restrictions require the use of a special contract with a Notice of Cancellation, permit the equity seller to pursue the equity purchaser for unconscionable advantage for two years after the sale, and eliminate the use of outside assistance in the pursuit of a foreclosure property. Investors who unwittingly or intentionally become foreclosure consultants to equity sellers may also place themselves in jeopardy under certain conditions.

Trustee's Sale
Most purchasers of foreclosures prefer to acquire their properties at the trustee's sale. At this time, it is possible to make property purchases without being in contact with the defaulted owner or foreclosing lender. Money talks. Anyone with money may make a purchase regardless of credit, race, religion, etc. The verbal auction permits the highest bidder to acquire a property by paying off only the remaining balance on the foreclosing loan regardless of the fair market value of the property. Debt recorded after the date of recording of the foreclosing loan is eliminated. Problems of unanticipated repair,eviction, payoff of superior loan(s), possible IRS redemption and inadequate research can present formidable obstacles to the inexperienced buyer.

REO Lender
When a trustee's sale is held with no bidder present, the property is said to be "sold" to the foreclosing lender. The REO lender usually will sell the property rather than retain the property as part of the lender's nonperforming assets. Finding that lender who will well the property newly acquired at the trustee's sale at a substantial discount is not easy although it is possible through a careful selection of lender sources of such properties. Individuals (not lending institutions) normally present better opportunities to purchase at a discount.

Friendly Junior Note
The fifth way to buy foreclosures is just a bit more complex but is an attractive way to acquire properties with less competition than purchasing at the trustee's sale. If the holder of the junior loan to the foreclosing loan agrees to sell his promissory note and trust deed at a substantial discount, the purchaser of the junior loan may cure the underlying senior loans and then foreclose himself on the newly acquired junior loan. The sale of the property through the junior loan can bring immediate return on the face value of the junior loan of the acquisition of the property with attractive equity.