Homeowner Help

Harried Homeowners, listen up.  If you're in trouble with your mortgage, if you're behind in your payments, you are not alone.  Help is out there.   I found this informative article and wanted to share it with you.  This blog has many authors, and great information about this topic. Read on for more information from this fantastic blog called http://loanmodify.wordpress.com/ Here's their email: planright@ymail.com

Short Sale, Loan Modification, Deed in Lieu and Other Options: How to Avoid Foreclosure and Get Out of Default

Written by the good folks (no name on this article but see blog for more info!) in Sacramento, CA "Whether you’re about to have your house sold at auction, or you’ve just missed your first payment, you still have options! In fact, even if you’re still making your payments on time, but feel that in the near future, you won’t be able to keep up, it’s time to act! As any financial expert will tell you, ‘prior planning prevents poor performance.’ I can personally tell you, as President and C.E.O. of the leading loss mitigation company, Option Next, at our company, we believe that the only way you can possibly decide what to do, is by knowing your options…

This article will go through each of the best available options, and will explain the advantages and drawbacks of each one… What Are Your Options? 1. Refinance - If you’re facing hardship because of the terms of your current mortgage, such as an adjustable rate mortgage which has started adjusting out of control, you may still be able to refinance into a fixed-rate loan. This option may not be available if you’re already far behind on your mortgage, or if your credit history is severely damaged. This is something that a qualified loss mitigation company can inquire about on your behalf. They should be able to give you a clear answer as to whether this is possible without charging you any fees. There are of course fees if you pursue the refinancing, but anyone who charges you a processing fee just to find out if it’s possible is looking to cash in on your misfortune… Refinancing Advantages: No damage to your credit, you stay in your home and work out a payment you can afford. Refinancing Disadvantages: Not available if your credit is severely damaged, only works if you owe less than the property is worth, the monthly payments will still be somewhat high, as you are refinancing your entire mortgage balance plus new closing costs. Summary: Refinancing is most effective if your mortgage has an adjustable rate, and either has yet to adjust, or has just adjusted, and you are no more than 30 days late. If you don’t owe more than the property is worth, have reasonable credit, and would want to keep your property, refinancing is the best approach. 2. Loan Modification - If the hardship you’re facing is temporary; if you feel that you can reasonably continue to assume your current mortgage if only some adjustments were made, such as deferring your past due amount to the end of the loan or reducing the payment for the next few months, then it’s possible that a good loss mitigator can negotiate a solution with your bank. Banks do not want to foreclose on your property. They would rather take your money than your land. They are poorly equipped to manage ownership of real estate, and would rather find a way to salvage the loan. A qualified loan mitigation company may be able to work out an agreement that works for both you and your bank. Loan Modification Advantages: No damage to your credit, you stay in your home and work out a payment you can afford. Loan Modification Disadvantages: May not be available if your credit is severely damaged. Monthly payments will still be reasonably high as you are keeping your entire mortgage balance plus default amount. Also, loss mitigation companies generally charge a pretty hefty fee for this service, sometimes as much as $5,000 or more. Summary: Loan Modification is most effective if your mortgage has an adjustable rate, or if you’ve fallen behind in such a way where you would normally be able to make your monthly mortgage payment, but just can’t keep up with the late fees and penalties. In most cases, it is only the late fees, penalties and interest rate that the bank would be willing to negotiate. If you don’t think that you’d be able to afford the mortgage at its current principal balance, even if the interest rate were reduced and the late charges removed, then a loan modification would not be a good option for you, and some fly-by-night loan mitigator may end up taking you for a ride. 3. Sell Your House - If the amount you owe on your property is less than or equal to the current market value of your property, you can always sell your house and pay off the mortgage in one lump sum. However, in today’s real estate market, that’s rarely the case. Most people in mortgage trouble today are faced with the problem of owing more on their property than it’s worth. If you are in a position to sell your home and pay off the mortgage in full, then you don’t need a loss mitigator and should simply contact your local Realtor… Selling Advantages: No damage to your credit, your mortgage is paid off in full and you walk away.. Selling Disadvantages: Not an option if you owe more than the property is worth. You give up the house and lose any remaining equity to closing costs and broker commissions. Summary: The traditional sale option is not available to most homeowners in today’s marketplace, as most owe more on their houses than they are worth in today’s market… If you are in a position where you owe less than the property is worth; If you’re willing to walk away from the property, this is a great option to preserve your credit… 4. Short-Sell - If you’re in that ever-growing category of homeowners who owe more on their property than it’s worth, and you’d like to sell your property, a short-sale may be right for you. In a short-sale situation, the bank agrees to take less than what you owe on the property in exchange for an immediate sale and a payoff at closing. You, the homeowner, end up walking away having settled your entire mortgage for whatever the property could sell for. The banks will report this on your credit history as ‘Settled For Less Than Owed.’ This is a negative mark on your credit score, but is nothing close to a bankruptcy or foreclosure. A short-sale, more than any other option, requires a highly competent loss mitigation company. See below for tips on how to make sure the company you pick is experienced and legitimate. Short-Sale Advantages: Minimal damage to your credit, the entire debt is wiped away and banks will not go after you for the difference between the foreclosure yield and your debt. There will be no foreclosure or bankruptcy on your record. A legitimate loss mitigation company should be able to minimize any promisory note that the bank may request. Short-Sale Disadvantages: You give up your house and suffer a slight black mark on your credit. The process is lengthy and somewhat complex, and a bad loss mitigator can cause it to fall apart. Summary: Short-sales are most effective if you owe more than the property is worth, are facing financial hardship and are or will soon become unable to afford your mortgage; If you have little or no liquid assets, and are willing to sell your home. 5. Deed in Lieu of Foreclosure - This is the last resort when facing foreclosure. It means simply giving away the deed to the bank in exchange for them not pursuing a foreclosure action against you. This does significant damage to your credit score, but is still better than a foreclosure. Deed-In-Lieu Advantages: No foreclosure on your record, and the bank will not pursue you for the remaining balance. Deed-In-Lieu Disadvantages: You give up your house and suffer a significant black mark on your credit. It’s only available if you haven’t been able to find a buyer for over six months, and if your sale date hasn’t been set yet. Summary: Short-sales are most effective if you owe more than the property is worth, are facing financial hardship and are or will soon become unable to afford your mortgage, and if you have little or no liquid assets. 6. Bankruptcy - This is the final alternative to foreclosure. This can be a costly process, and depending on the laws of your state may or may not be particularly helpful. Bankruptcy Advantages: Buys you some time to come up with better options, and allows the bankruptcy trustee to act as a loss mitigator on your behalf. Bankruptcy Disadvantages: Suffer a significant black mark on your credit. On its own, it does not provide a permanent solution, and when done properly, results in huge fees to a lawyer and a referee. The results of improper foreclosure filings are too disastrous to even discuss…

Summary: Bankruptcy is a last resort, and is often too expensive for people in financial hardship to afford. A sloppy bankruptcy filing does nothing but waste your time and money, ruin what’s left of your credit, and will often prevent you from exploring the better options most likely available to you. Never pursue a bankruptcy without speaking to a well-qualified attorney."  

Comments

[thewriterealtor]

Thanks for reading my blog and for your suggested sites. I agree - Homeowners are suffering, and Homebuyers are waiting for homes to come on the market to buy. Other buyers cannot get financing. Deals are falling apart left and right. Realtors, real estate attorneys, home inspectors, families, are all suffering greatly. I don't know if it helps, but I continue to read as much as I can, inform my buyers and sellers, and try to stay positive!

[Foreclosure Help]

That was a very helpful article. A good find!

I am amazed at the mess we have made of the Mortgage, real estate, and the entire debt and loan industry. Homeowners are in some real trouble as of late. I have paid close attention to the help made available to Homeowners under the pressure of mortgage foreclosure and have found a few helpful places on the web where Homeowners can get reliable help. I have left the information below.

www.hopenhousing.org
www.hopenhomeowner.com
www.hud.gov
https://soprofessional.wordpress.com