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TITLE AND SUBJECT OF ARTICLE
Stopping
Foreclosure – How To Stop Home Foreclosures
It’s easy to get behind on your bills. It
happens even to the best of us sometimes. When it comes
to mortgage payments though, getting behind can mean
risking your home’s foreclosure. The best way to stop
foreclosures is to avoid getting behind on your mortgage
payments in the first place, but when circumstances
prevent you from paying on time, what can you do? Where
can you go?
The first thing to be sure to do, is
be open and honest about what’s going on. Don’t try to
hid...
stop foreclosure, stopping foreclosure,
home foreclosure
It’s easy to get behind on your
bills. It happens even to the best of us sometimes. When
it comes to mortgage payments though, getting behind can
mean risking your home’s foreclosure. The best way to
stop foreclosures is to avoid getting behind on your
mortgage payments in the first place, but when
circumstances prevent you from paying on time, what can
you do? Where can you go?
The first thing to be
sure to do, is be open and honest about what’s going on.
Don’t try to hide from your lender, or ignore them. This
will just give them reason to believe that you aren’t
going to pay them back. You need to contact them and be
open and honest about your financial situation.
Lenders do not want to foreclose. It is only a last
resort for when they feel that you will not be able to
pay them any other way. There are a few things you can
do to stop foreclosure.
1)Reinstatement – This is
when you negotiate to reinstate your behind payments by
promising to repay later a lump sum to get back on track
with your regular payment plan.
2)Forbearance –
This is when you are allowed to hold off on payments for
awhile with a plan for later getting back on track with
your payments.
3)Modification of the Mortgage –
This is when the mortgage is re-negotiated for a new
workable payment plan financed over a longer period of
time and often smaller regular payments.
4)Selling your Home – This means losing your home, but
it can certainly mean getting more money for your home
than if you had a foreclosure. You would be given a time
period to sell your home in order to pay off the rest of
your loan to get out of debt.
5)Deed in Lieu of
Foreclosure – This is when the lender and you agree that
you will give up your home, and they will forgive the
debt. This does not look good on your credit history,
nor does it allow you to keep your home, but it is still
much better than a foreclosure.
All of these
foreclosure stopping methods depend on what your
financial situation is in the present, what potential it
has for the future, and whether you can negotiate a
workable plan with your lender. It’s best to get all
your financial documents in order, so that you can
present your best possible case to your lender. If they
see that there is good potential for you to pay them
back, then they will certainly be willing to negotiate
with you. You may end up paying higher interest rates
over a longer period of repayment, but it’s certainly
worth it if you can keep your home.
If you need
help in the negotiation process, or getting your
financial records in order to plead your case, there are
many financial advisors that specialize in helping to
stop foreclosures. Financial advisors can be your savior
if you don’t know where to start when it comes to
negotiations. If you are going to seek an advisor for
help, be sure that they are working on results. That
means don’t pay them any fees up front. Foreclosure
advisors that know what they’re doing, will only take
payment if they do the job for you successfully.
How To Invest In
Government Foreclosures
You have probably seen the infomercials in
the past that are trying to tempt you into buying
government foreclosures. And more than likely you
probably dismissed these offers as a get rich quick
scheme that will never work. While government
foreclosures may not be exactly what you see and hear on
television, they definitely have their place in the real
estate industry.
government foreclosures
You have probably seen the infomercials in the past that
are trying to tempt you into buying government
foreclosures. And more than likely you probably
dismissed these offers as a get rich quick scheme that
will never work. While government foreclosures may not
be exactly what you see and hear on television, they
definitely have their place in the real estate industry.
In order to take advantage of government
foreclosures you must first know what they are.
Government foreclosures are properties that were
financed through FHA insured loans. This means that the
FHA insured the lender that the owner will meet the
financial obligations that are required. But when the
owner fails to do this, the lender will then take the
home back. At this time, the FHA is then responsible for
reimbursing the lender for any losses that they may have
incurred. The FHA loses in two ways; they do not get the
home, and they also have to pay the lender for their
losses.
Government foreclosures can also come
about in other ways. If somebody decides that they are
going to avoid paying taxes, the IRS may take the home
from the buyer. In other cases, government foreclosures
may happen when a home owner is sent to jail. Instead of
simply letting the home go to waste, the home is simply
turned into a government foreclosure.
Government
foreclosures are usually sold to the public via real
estate auctions. This means that anybody who is
interested in these properties can attend these auctions
and bid on the homes that interest them. Most often
times, investors suck up these government foreclosures
the first chance that they get. It is not uncommon to
find government foreclosures that are listed at 10% or
more off of the market value price. This means that you
can buy a home, and then quickly turn it into a profit.
Finding government foreclosures can be done by
keeping an eye on your local real estate classifieds.
Foreclosure auctions are usually listed in major papers
for at least one day so that the public has a chance of
finding out about them.
The infomercials don’t
lie! Government foreclosures are a great way to make
money. Even though you probably won’t get rich quick
like you are told, you should be able to make at least a
little bit of money on each transaction.
How to Save Your
Home from Foreclosure
Nef Cortez is a licensed Real Estate
Broker, Real Estate author of the Weekly News in Walnut,
California, and 29 year veteran in Real Estate sales. A
past director for the California Association of
Realtors, and currently Vice-Chairman of the Diamond Bar
Chamber of Commerce. Nef has a varied degree of
experience in mortgage origination, real estate
investments, and acquisition of foreclosure properties.
Please visit www.nefcortez.com for info
Real
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diamond bar,walnut,escrow,default,bank
The Great
American Dream of homeownership is what many in our
country diligently strive for. Homeownership brings many
benefits, as well as responsibilities. Entrance into the
status of homeowner may come with little or no cash
investment for a down-payment. The loan that is obtained
by a first time homebuyer is usually a special loan
designed to assist those in the entry level, who have
not yet accumulated a substantial sum for the
down-payment. Banks will always prefer to lend to a
borrower that has more to invest. Usually, the desired
amount is at least ten or twenty percent of the purchase
price in the form of cash. Almost without exception, the
banks or mortgage lenders will make special loans with
very little or no down-payment to a homebuyer because
the loan is usually insured or guaranteed against loss
of principal by a governmental or quasi-governmental
agency.
First time homebuyer loans are usually
the first loans that go into default in an economic
downturn. Financial hardships caused by either loss of
job, accident, injury, or relational problems begin to
turn the American Dream into a nightmare. Although in a
normal economy, there are very few people that actually
end up losing their homes, those in the midst of the
foreclosure suffer and many do not see themselves
successfully out of the problem they get into. The
following information is shared in the expectation that
it will provide a path for those caught in that
difficult situation, and assist in resolving their
particular financial problem.
The Foreclosure
Process in California
The California home-buying
process usually involves the use of the deed of trust,
which by its legal definition involves three parties;
the trustor (borrower), the beneficiary (lender), and
the trustee (neutral third party receiving the right to
foreclose). The deed of trust usually includes a “power
of sale” clause that gives the trustee the legal right
to enforce collection of the debt. Collection of the
debt is ultimately enforced by the right to sell the
house when the borrower fails to make their mortgage
payments. Defaulting on one's loan causes the start of
foreclosure, the process by which the lender takes over
the home in order to recover the their principal
investment. Once the house is either sold at auctioned
or "repossessed" by the lender, it is sold and the
former owner must vacate at the discretion of the new
owner. When there is a power of sale clause in the deed
of trust the non-judicial process of foreclosure is
used. In non-judicial foreclosure the trustee must meet
a few requirements before he or she sells the property.
In comparison to a judicial foreclosure, Non-judicial
foreclosure is quick because the trustee does not have
to obtain a court order to foreclose, nor is court
supervision required in order to sell the house, as is
required in the judicial foreclosure process. The
judicial process of foreclosure is used when a power of
sale clause is not in the deed of trust.
In
California, the timeline of non-judicial foreclosure
begins when the trustee files a notice of default. This
is a letter which is sent to the owner/trustor notifying
him or her of their default of the loan. This notifies
the owner of the intent of the lender to follow through
on their right to collect on the debt. The copy of the
notice, which is recorded at the County Recorders Office
of the appropriate county, is mailed to the address of
notice as per the deed of trust. Recording of the notice
of default can vary greatly depending on the
beneficiary. In can occur anywhere between a week to
many months after one misses their first mortgage
payment. The step that follows next is that stage of the
foreclosure process in which there is a filing of the
Notice of Trustee's Sale. No sooner than ninety (90)
days after the trustee records the notice of default,
the Trustee must publish a notice of trustee's sale in
the local paper and simultaneously file that notice with
the county recorder's office. No sooner than twenty days
(20) after the notice of trustee sale is filed, the home
may be sold at public auction for the amount of the debt
plus foreclosure costs. If no one bids at the auction,
the lender assumes ownership of the property, and may
dispose of that property to recover their cash
investment.
What You Can Do to Avoid or Stop the
Foreclosure Process
The first and most important
step that one can take in preventing the loss of one's
home through the foreclosure process is to "communicate,
communicate, communicate"! This first step, along with a
few others, is detailed below.
* Negotiate with
the lender. The lender will always work with a client of
theirs if the client takes the initiative to communicate
any financial hardships that may have caused the
default. Negotiate with the lender for a payment
adjustment in order to make up for the missed payment or
payments. It is imperative that you act quickly in order
to prevent the sale of your home, because once the
foreclosure process begins you only have 120 to 140 days
before your house is sold. Contact your lender to
explain your situation and work out a way for you to
keep your house. You have the most time and the best
chance of being able to negotiate a solution before the
trustee files the notice of default. If foreclosure has
already begun you must contact the lender during the 90
day period before the notice of trustee sale is posted
and filed.
One of the most common causes of
failure to communicate is that many homeowners facing
foreclosure avoid contacting their lenders because they
are upset or embarrassed. Many times the homeowner
mistakenly belie the lender will not help them because
they feel that the lender prefers to foreclose. In
reality, the opposite is true. Banks and other lenders
are primarily in the business of earning money by
collecting interest on loans that they have made. Their
net income is derived by having a specific process in
place in order to invest and receive the interest
payments. They find it cumbersome to go through the
foreclosure process, and usually are not well equipped
to manage foreclosed properties. Because of this, most
lenders are willing to work with homeowners because
foreclosure is more costly for them. It forces them to
allocate time and resources to an unprofitable activity.
Contact your lender immediately! Do not ignore phone
calls and letters from your lender. If you do not inform
your lender of your situation, it will be will assumed
that you do not intend to pay and the process will go
forward.
It is important to prepare well before
you contact your lender. You must gather all documents
supporting your income and expenses, as well as all loan
account information. When you call ask to speak to
someone in the customer service department, be upfront
about your circumstances and be prepared to discuss your
financial situation in detail. Your lender needs to know
clearly your financial situation in order to determine
whether they are able to offer a solution. Your lender
should be able to then offer you one of the following
options:
Loan modification: this is when the
lender agrees to modify the terms of the loan. As an
example, the lender may agree to extend the term of the
loan or lower the interest rate of the loan. This option
helps you catch up on unpaid payments by making your
monthly payments affordable. Loan modification may be
appropriate if you have recovered from a financial
problem and can afford to make your loan payments if
they are adjusted.
Repayment plan: This option
allows you to catch up on unpaid payments by adding a
portion of the late payments to your regular monthly
payments. A repayment plan may be suited for you if you
have recently recovered from a short- term financial
problem and are now able to resume making your regular
monthly payments but need time to catch up on the unpaid
payments.
Reinstatement: This is when you are
able to pay off the entire balance of the unpaid
payments by a specific future date. Reinstatement may be
appropriate if you know and can prove to your lender
that you will soon be receiving a quantity of money that
will allow you to bring your loan account current.
Forbearance: This is when the lender agrees to
temporarily reduce or stop your loan payments with an
agreement on another plan to bring the loan account
current. This option stops the foreclosure process and
is combined with other options, often reinstatement.
If you are uncomfortable with negotiating with your
lender by your-self or if you want to better understand
of what options you have, contact a reputable
foreclosure assistance counseling agency. When selecting
an agency to work with, choose one from the U.S.
Department of Housing and Urban Development’s list of
approved housing counseling agencies. Beware of phony
“counseling agencies” that approach you with the promise
to advise you on your situation, provided that you pay a
large fee!
* Borrow money from family or friends.
Many people tend to shy away from this as their first
option. One would think that this option would be the
most common-sense place to start. Many people completely
eliminate this as a means to gather the funds necessary
to bring the loan current simply because they are
embarrassed to ask. They do not want family or friends
to know that they have encountered financial
difficulties, so they look elsewhere. Family or friends
many times are te ones that are most committed to
lending a helping hand. If they are able, they are very
likely to be very willing to help out. Oftentimes
because of embarrassment, they are not approached until
it is too late in the foreclosure process, and are
unable to obtain funds quickly enough to help out.
Obviously, there are situations where the family
members or friends are not approached because there
are already strained relations, or they want to avoid
causing any discomfort to their inner circle of friends
or family.
One of the best things that I can
recommend to you is that you approach the request for
assistance in a very businesslike manner. By that I
mean, you should look to secure their interest just as
you would expect if you were the one providing the funds
to someone else in trouble. The greater degree of
security that you can offer them in protecting their
funds, the greater probability of successfully obtaining
the funds necessary to stop the foreclosure.
*
Borrow from institutional lenders. A third option is to
borrow from institutional lenders to bring up back
payments. This can be done by refinancing, or simply by
borrowing against the equity in the home. These lenders
will primarily consider equity when determining approval
of a loan. Equity is defined as the difference between
the fair market value of the home and what is owed on
the mortgage. Refinancing is when you take out another
loan in order to pay off the existing mortgage. When
refinancing to avoid foreclosure, you may be able to
obtain a lower interest rate, a longer payment period,
and/or a lower monthly payment which would make your
mortgage payments more affordable. Usually lenders that
become aware that you have fallen behind in the mortgage
payments will shy away from lending to you, so if you
expect to borrow from an institutional lender, you must
act very quickly before your credit reflects any late
payments. If the lender is aware that you are in
default, they will probably refuse to lend, or offer an
loan with much higher interest rate to account for the
borrower's inability to meet their financial
obligations.
* Borrow from private party
lenders. There are individuals that have funds to invest
and are looking for a higher return on their investment
than can be obtained by depositing their monies with
savings institutions. These individuals are expecting a
high rate of return on their cash investments, and
understand that the loan that they are funding is a
high-risk loan. Usually, once the homeowner falls behind
in their mortgage payments, it is increasingly difficult
to borrow money. These private lenders usually consider
the equity in the property when making the loan. Because
the borrower is behind in their payments, the lender
cannot look upon the borrower's ability to repay in a
timely manner as the primary basis for qualification.
The lender looks for the security of their investment to
the ability to recover it based on the property's market
value and what is owed by the borrower on the property.
Almost without exception, these loans carry a much
higher interest rate than the normal home loans
obtainable at banks or other lending institutions. They
are, however, many times the only option left to a
homeowner in foreclosure
* File for Bankruptcy
There are two chapters dealing with personal
bankruptcy; Chapter 13 and Chapter 7. The main
difference between the two chapters is that Chapter 13
helps individual debtors pay off their debt with court
supervision and protection while Chapter 7 eliminates,
or in legal terms, liquidates, the debtor’s debt. Based
on this simplistic definition alone bankruptcy may seem
like the simplest and best solution to your financial
problems. However when considering filing bankruptcy be
aware that it is not an action that simply frees you
from your debt, it is a complex legal process that has
weighty financial consequences. For most debtors it is
not the best option and should be considered as a last
resort after all other options have been investigated or
attempted. Individual financial circumstances are so
different that you should seek the counsel of a
financial planner or accountant and a bankruptcy
attorney in order to discuss your particular financial
situation and the implications of a bankruptcy. If you
do not have an established relationship with an
attorney, I would recommend that you get two or three
opinions.
6. Sell the Home. Many times, the best
solution for someone that has fallen behind in their
payments is to sell the home, and thereby recoup 100% of
their equity minus selling costs. Unfortunately, many
homeowners get caught up in the emotions of the hardship
and overlook the realities of their financial
circumstances. Almost as if with blinders on, they
stagger about hoping for a magic solution, sometimes
waiting until it is to late to come up with a rational
plan. If a homeowner can reasonably assess their
finances and determines that they cannot carry the
financial load, they might be much better off selling
the property and preserving the bulk of their equity
until they are again able to become homeowners, if they
so wish. They must act quickly so that their credit is
not ruined by the failure to make their mortgage
payments on time, or by using the bankruptcy process
just to forestall the sale of the home. Don't let your
equity be eaten up by the high costs inherent in loans
made to those in distress. Sell the home and preserve
the most important or valuable part, namely the Equity!
Unfortunate circumstances befall many of us as we go
through life. Protect your financial health by being
proactive when these problems occur. As long as you act
quickly and take steps to preserve your assets, you
should be able to avoid going into foreclosure. If you
do go into foreclosure, following these guidelines
should minimize the pain of the process. Seeking
assistance promptly from professionals in taxation, law,
and real estate will improve your chances of handling
the process well.
For other real estate related
articles or information, visit www.nefcortez.com.