Borrowers dealing with the threat of foreclosure should know about as many options as possible, if they are attempting to save their homes before they run out of time. Some of these options fall under the category of "loss mitigation," which usually refers to a third party (usually either third party company or a division of the bank) that helps negotiate with borrowers to find solutions to foreclosure.
But under this category of loss mitigation fall a number of solutions to foreclosure that may apply in various circumstances. Some lenders may not offer each of these solutions right from the start of negotiations, but homeowners can always request more information about them if they believe one may be appropriate for their foreclosure situation. The seven solutions detailed below are typically classified as loss mitigation.
Cash for keys. In a cash for keys agreement, homeowners are offered a set amount of money from their bank to move out. The offer is usually presented by mail or in person through a local third party, such as a real estate agent or law firm. Banks offer such solutions in order to negotiate a peaceful transfer of a foreclosed home and give the former owners some cash in their pockets for moving expenses.
Deed in lieu. A deed in lieu of foreclosure can be given to the lender by homeowners who are just trying to unload the house, avoid foreclosure, and move out. Borrowers offer to give the deed to the property back to the bank in exchange for the mortgage company not going through with the foreclosure process. At that point, the bank would be able to list the house for sale and attempt to recoup some of its losses.
Loan modification. Much media attention has given to the idea of modifying mortgages that are in foreclosure. There are a vast number of ways to do this, from lowering the interest rate to extending the repayment period of the mortgage. The only real drawback to this solution is that banks are rarely that excited about modifications, because a properly structured one will benefit homeowners more than lenders.
Partial claim. For homeowners with a mortgage guaranteed by the Federal Housing Administration, a partial claim may be used to give the bank a one-time payment from the government in order to stop foreclosure. In exchange, a lien is placed on the property, although the lien has a zero percent interest rate and does not have to be paid back until the first mortgage is paid off or the home is sold or ownership is otherwise transferred.
Short sale. A short sale allows borrowers to sell their property for less than the total amount that they owe to the lender. All of the mortgage companies have to accept a reduced payoff for the sale to close, or the homeowners will have to bring cash to closing to pay off any remaining liens. While this can help borrowers avoid losing their homes, banks are not very quick to approve short sales.
Short refinance. With this solution, the bank agrees to lower the total due on the mortgage in order to facilitate a refinance through another lender. Oftentimes, homeowners may be approved for a certain amount of money to refinance, but the amount they owe on the first mortgage along with fees and unpaid interest makes it impossible. A short refinance allows the refinance to go forward and the foreclosure to be ended.
Special forbearance plan. Under a forbearance agreement, homeowners can make a lower payment or have no payment at all for a certain period of time. This can be more easily negotiated long before homeowners fall behind, as banks will not be drawn to help borrowers who ask for lower payments after they have begun missing them. In addition, the homeowners will eventually need to pay back any payments they deferred.
Homeowners facing foreclosure have the problem of not knowing what options may be appropriate for their individual situations. And unfortunately, the lenders are often no help, pushing borrowers into expensive repayment plans or filing fraudulent lawsuits alleging foreclosure. However, the more that they know about various solutions that will help them save their homes, the less financially destructive the situation will be.
Nick publishes articles on the ForeclosureFish website to provide foreclosure help and news to property owners in need of assistance. The site examines numerous methods to save a home, including deed in lieu, filing bankruptcy, short sales, fighting foreclosure in court, and more. Visit the site for an e-book explaining the basics of foreclosure and how to stop the process: http://www.foreclosurefish.com/
Article Source: http://EzineArticles.com/?expert=Nick_Adama
Friday, May 22, 2009
Thursday, May 21, 2009
How to Get Help When Facing Foreclosure
Foreclosure is the way that lenders attempt to get back some of the money that they are owed. The lender takes a home back when the homeowners fail to make their monthly payments. In most cases, several payments must be past due for the mortgage company to even begin to think about a foreclosure, but there are always exceptions to the rule. Because there are so many scam artists out there, mortgage companies will sometimes begin action after one payment is missed if the loan is brand new and due for its first payment. These accounts would be considered first payment defaults. Not making the first payment of a mortgage is a sign to the bank that something is drastically wrong.
It is important to remember though that foreclosure is a process so do not get so scared from the letter that you pack up right away and leave the home. Even if you have no intentions on getting the home out of the foreclosure, there is no reason to leave until you absolutely have to. The time that you must leave is when the home is auctioned off and there are new owners serving you an eviction notice. Even after the home goes to auction, you may have legal rights to stay in the property if your state gives a redemption period. The redemption period is a set amount of time after the home goes to auction that the homeowner is allowed to payoff the loan completely and regains legal ownership of the home.
First 3 Steps To Take When Foreclosure Is Imminent
If you have not already begun to look into various options, as soon as you receive the foreclosure letter in the mail, you need to start making phone calls. The first place you need to call is that of the mortgage company. You will want to discuss with them what your total amount due is, including and possibly attorney fees and costs. You will also need to make sure that you are being told of the timeline you have to get things resolved. Even if the exact auction date is not yet set, the mortgage company should be able to give you a rough estimate on how long foreclosures usually take in your particular state.
Next you want to make sure that you are looking over all of your income that is coming in. Forget about the other bills and obligations as you want to save your home. Figure out how much money you can come up with in order to pay the amount past due or to at least start a repayment plan. Borrow money from friends and family. You could ever check to see if you could get an advance on your pay from your employer.
The third thing you want to do is to check with your mortgage company to see what options they may have available for you. They have the say so to set you up on repayment plans or to give you a loan modification and simply bring you current. There will be information that you are going to need to send them but as long as you are working with them you should be fine.
3 Steps To Take When An Auction Date Is Set
If the auction date is set then your time is running up. Now is the time to act fast. It is important to make sure that you are continuing to keep in touch with your mortgage company while they work on options for you. This is the first thing that you will want to do.
The second thing you may want to do is to consult an attorney to make sure that you are completely aware of all of your legal rights. There is a possibility of a bankruptcy giving you enough time to get things situated. The third thing you want to do is to prepare for the worst. Start to figure out what you are going to do and where you will go should that auction date come and go without you being able to resolve the situation.
How To Get Ready
Whether you are looking at getting help from the mortgage company, applying for a bankruptcy, or looking for a new place to live there are certain things that you are going to need to have in order. You need to have proof of all of your expenses and all of the income that is coming into the household. It is also a good idea to make sure that you have your previous years income tax return handy.
In the end you will find that the more proactive you are, the more options there will be for you. No one wants to end up at the end of his or her battle with a foreclosure without a home. Do what it takes but always prepare for the worst so that you are not left without a plan.
MJ Williams-Rasch is the owner of http://www.fightingmyforeclosure.com and has assisted those in times of need for over 20 years. All detailed, helpful information on the best ways to successfully stop your home foreclosure can be found by clicking here: FightingMyForeclosure.com.Article Source: http://EzineArticles.com/?expert=MJ_Williams-Rasch
It is important to remember though that foreclosure is a process so do not get so scared from the letter that you pack up right away and leave the home. Even if you have no intentions on getting the home out of the foreclosure, there is no reason to leave until you absolutely have to. The time that you must leave is when the home is auctioned off and there are new owners serving you an eviction notice. Even after the home goes to auction, you may have legal rights to stay in the property if your state gives a redemption period. The redemption period is a set amount of time after the home goes to auction that the homeowner is allowed to payoff the loan completely and regains legal ownership of the home.
First 3 Steps To Take When Foreclosure Is Imminent
If you have not already begun to look into various options, as soon as you receive the foreclosure letter in the mail, you need to start making phone calls. The first place you need to call is that of the mortgage company. You will want to discuss with them what your total amount due is, including and possibly attorney fees and costs. You will also need to make sure that you are being told of the timeline you have to get things resolved. Even if the exact auction date is not yet set, the mortgage company should be able to give you a rough estimate on how long foreclosures usually take in your particular state.
Next you want to make sure that you are looking over all of your income that is coming in. Forget about the other bills and obligations as you want to save your home. Figure out how much money you can come up with in order to pay the amount past due or to at least start a repayment plan. Borrow money from friends and family. You could ever check to see if you could get an advance on your pay from your employer.
The third thing you want to do is to check with your mortgage company to see what options they may have available for you. They have the say so to set you up on repayment plans or to give you a loan modification and simply bring you current. There will be information that you are going to need to send them but as long as you are working with them you should be fine.
3 Steps To Take When An Auction Date Is Set
If the auction date is set then your time is running up. Now is the time to act fast. It is important to make sure that you are continuing to keep in touch with your mortgage company while they work on options for you. This is the first thing that you will want to do.
The second thing you may want to do is to consult an attorney to make sure that you are completely aware of all of your legal rights. There is a possibility of a bankruptcy giving you enough time to get things situated. The third thing you want to do is to prepare for the worst. Start to figure out what you are going to do and where you will go should that auction date come and go without you being able to resolve the situation.
How To Get Ready
Whether you are looking at getting help from the mortgage company, applying for a bankruptcy, or looking for a new place to live there are certain things that you are going to need to have in order. You need to have proof of all of your expenses and all of the income that is coming into the household. It is also a good idea to make sure that you have your previous years income tax return handy.
In the end you will find that the more proactive you are, the more options there will be for you. No one wants to end up at the end of his or her battle with a foreclosure without a home. Do what it takes but always prepare for the worst so that you are not left without a plan.
MJ Williams-Rasch is the owner of http://www.fightingmyforeclosure.com and has assisted those in times of need for over 20 years. All detailed, helpful information on the best ways to successfully stop your home foreclosure can be found by clicking here: FightingMyForeclosure.com.Article Source: http://EzineArticles.com/?expert=MJ_Williams-Rasch
Obama Loan Modification Plan Guidelines and Tips to Understand Them
What the Obama loan modification guidelines offer is a lifeline for millions of borrowers who are mired in home loans that are becoming unmanageable or for those who are about to lose their homes. What the plan intends to accomplish is an alternative to foreclosure if the homeowner qualifies for the program. To help this along lenders will be given financial incentives to present the plan to qualified homeowners. In order to meet the criteria for help each application will go through an examination process and relief will be forthcoming based on each individual case. The first step is to find out how the new loan modification plan functions.
Here are the 10 most-asked questions regarding Obama's loan modification guidelines:
#1: Do I have to be in arrears on my mortgage payment in order to qualify for a modification application?
- No. Preventing foreclosure and keeping people in their homes during their financial struggle is a primary aim of the new loan modification plan. In fact both lenders and servicers receive a better compensation for restructuring loans well before they become delinquent.
#2: What do I do to find out if my loan is eligible for a mortgage modification application?
- If your loan was entered into before January 1, 2009 and the amount was less than $729,750 there is a good chance that it will be under the guidelines of the Obama loan modification plan. If it is an apartment-style building with 2-4 unit properties the peak amount is higher.
#3: If I own duplex and reside in the building in another unit will I be eligible to make a loan modification application?
- Yes. If the residence is your principal dwelling then you can apply. However, investment properties, additional homes or vacation properties are excluded from the program.
#4: I can't afford to make my present mortgage so what is the lowest I will pay with the new mortgage modification plan?
- This depends on your monthly gross income. The aim of the new loan modification plan is to lower the monthly payment with all the extra charges - taxes, insurance and homeowner dues - so that they equal 31% of the total monthly income of the home. So if the payment is 29% you would not qualify for a lower payment but it were 34% you would.
#5: Are second mortgages included in the new loan modification plan?
- No. First trust deeds are only eligible. However this is where your lender might help with a plan to deal with your second mortgage by either lowering it or completely eliminating the debt. In fact the Treasury Department is offering bonuses for those institutions that will help in these cases.
#6: Will my lender be required to offer me a loan modification plan?
- Not completely. The program is completely voluntary on their part. However, because of the generous rewards put forward by the Treasury Department most lenders and servicers are expected to participate. However, for those homeowners who are 60 days or more behind in their payments the lenders are required to re-evaluate your situation to see if you will qualify.
#7: To get to the 31% debt ratio how will my lender adjust the payments?
- To start off, the interest rate will be lowered as far down as 2%. The, if the debt ratio is still outside the parameters, the mortgage term will be extended as much as 40 years. If the numbers still don't come out in your favor then they may defer a portion of the principal. This could be interest free to you and recouped by the lender if the home is sold.
#8: How do I find out which are participating lenders for the new plan?
- Simply call your lender or servicer or you can visit the government website that deals with the Obama loan modification plan.
#9: What are the document requirements for application to the Obama loan modification plan?
The financial paper trail will go a long way in the approval process for the new loan modification plan. The documents should be in order and properly written:
- A declaration of income and expenses
- A document outlining your financial condition
- Paycheck stubs
- W2
- Tax return.
#10: What does the loan modification application cost?
- Unlike the usual banking fees this is a free application. However there are scam-artists around so the Treasury Department is advising homeowners against paying fees to anyone.
These are the highlights of the new plan however homeowners are encouraged to take the initiative and find out they can about the Obama loan modification program as the information is crucial to a successful outcome. As the days go by lenders will be flooded with applications. So in order to get in on the Obama loan modification plan you should act quickly to get the lowered payments.
| Figure out if you qualify by visiting Obama Loan Modification Plan which provides you with important information, including... - Up to date guidelines on if you qualify Article Source: http://EzineArticles.com/?expert=Frank_Stevenson |
Understanding the Foreclosure Process
Many people are finding themselves in a situation where they are unable to afford their house payment. If you are one of them, take heart that you are not alone and that there is real help for you. Before you can deal with with this you must understand the process. The lender doesn't want your home if it's possible to work something out. Quite frankly, they'd rather you make the payments. So what happens in a foreclosure and what can you do to stop it?
It's crucial that you communicate with your lender before you find yourself behind in your payments. The lender will be easier to deal with if you are up front about your situation. You might work out a plan that helps you maintain your home ownership and your credit. If you are past this point then here is what will likely occur.
First, (read your mortgage documentation) the lender will notify you normally if you are late with your payment 15-30 days after the due date. The frequency of notification will increase as time passes. After 90 days, with no communication, the lender will normally refer the loan to an attorney to begin the foreclosure process. The homeowner is given the foreclosure notice through a "Lis Pendens" (suit pending) document. The home will be sold to satisfy the loan and any deficiency (shortage) will be the responsibility of the borrower (you). This process can take from 5 months to 1 year.
There are alternatives to foreclosure and each will require you to communicate with the lender and make every effort to comply with their procedures. it is important to understand that the loan you originally agreed to has more than likely been packaged with other loans and sold to a third party. This complicates the process but you must continue to make every effort to communicate with the company servicing your loan. One of the alternatives to foreclosure is "Deed in Lieu of Foreclosure". This basically turns the property back to the lender without the added expense of a foreclosure in the local court system. Another method is to sell the property "short". If the lender agrees, the property is sold for less than the amount owed. The deficiency is still your responsibility, but this is slightly better for your credit.
All of the various methods of handling a foreclosure, (besides making your payments on time) will have a negative impact on your credit. Some are a little less damaging than others. We have seen many homes left in horrible condition as a result of the anger and frustration of a homeowner facing foreclosure. If a lender has to make many repairs to the property in order to sell it, it will delay the sale and as the market declines, your shortage will increase as the sale price is reduced.
Be careful because there are some companies looking to prey on your unfortunate situation. If someone wants you to sign anything or make payments to anyone other than the lender, consult an attorney or it might cost you more than your home.
If you are looking for ways to avoid foreclosure, we have compiled some research and put together some information you can use. You must act before it's too late.
| Save your home from foreclosure by visiting: http://StopForeclosuresGuide.com Article Source: http://EzineArticles.com/?expert=Mark_A_Wagoner |
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