Posts Tagged ‘avoid foreclosure’
Friday, September 8th, 2017
Believe it or not, there are MANY homeowners who are underwater, still, years after the mortgage meltdown. According to Core Logic, 6.1% – 3.1 millions homes – of all mortgaged CA homes have negative equity, as of the first quarter of 2017. Short sales are also increasing recently as many variable mortgages that were obtained back in the heyday before the crash recently reset.
If you are underwater, delinquent with your mortgage payments, or about to be, or if you are making payment on a loan(s) that reset and the increased payments or rates are a struggle, you need to be proactive, and act sooner rather than later.
Here are some options to help you start thinking and researching:
1. Call your lender(s). If you are late on payments or are about to be, you need to call your lender asap. They can help you figure out a plan. They likely will start with the possibility of a loan modification, where your payments can be reduced if you qualify.
Note here that depending on how much your payments are and how deeply underwater you may be, a loan modification may not make sense, but it is still important to go through the motions as a first step to try options.
2. Refinance. This is great in theory but if you are underwater and there is no equity in your home it is not possible. If there is at least 10% equity in your home then definitely find a good mortgage professional (call me if you need a referral) and go this route.
3. Sell the house if you have enough equity. This will allow you to move on and make a smart purchase that fits into your budget, or rent. Of course if you are underwater chances are you do not have equity in your home so this would not be an option for you. But if you can sell your home and make a little money to pay down some debt and get into a rental or inexpensive replacement property, it is best to do that sooner rather than later.
4. Short sale. This is a great option if you are underwater and the loan modification does not work or provide enough financial relief. It will effect your credit but not as badly as a foreclosure. Make sure you speak with a real estate agent who is familiar with short sales and knows how to negotiate with the bank(s), and that you really understand the process and consequences – click here for more information on short sales. There is a timeline for short sales that can help you figure out how long it might take before you would have to move out – click here to access the timeline for California.
4. Other options. If a short sale is not right for you for whatever reason, there may be other options (such as a deed in lieu of foreclosure and possible lender or government programs – there are also specific programs for military members and possibly others so you need to do thorough research) that could work depending on your circumstances. Again, it is important to find an expert who can provide appropriate counsel that will allow you to make informed decisions.
4. Foreclosure. This is a final option if you have exhausted others and there is no relief in sight for getting out of your mortgage obligations. Make sure that before you go down this road you have investigated other options that may apply to you. Foreclosures can seriously affect your credit scores for years.
6. Credit counseling. If your debt issues extend to other areas or credit, such as high credit card balances or trouble paying bills, you should seek counseling to help you get back on track so you can pay down your debt and move on. Don’t focus on the trouble you have, but on improving it so you can be sure not to make the same mistakes again down the road. There are some amazing credit counseling programs and helpers out there – I know of a wonderful attorney who handles this so let me know if you need the referral.
The bottom line is that if you are in trouble with your mortgage and other debt, do not wait until it is too late. The door for other options could close on you, forcing you to foreclose on your home. If you act early you can usually come to a better solution that will allow you to move on without taking such a hard hit to your credit score.
Thursday, September 29th, 2011
With the economy in turmoil and people scared to make big purchases, the real estate business is undoubtedly challenged. In difficult times some people panic, and I see that happening amongst distressed borrowers, yet there is a process to the situation that you need to follow in order to have a chance to save your home and your credit. I have blogged on this topic before and it is worth repeating.
If you are in a distressed situation you need to approach it methodically, even if you don’t believe that there are options. Foreclosure should be the last resort. Here are some steps you can take to try and avoid it:
1. Contact your lender. I know this sounds horrible, but you need to start somewhere. Some lenders, like Bank of America, actually have been stepping up to help people avoid foreclosure. You need to have all pertinent information ready when you call – your loan number, employment information, bank statements, etc. You want to see if you can qualify for a loan modification. This will take some time, but you need to get the ball rolling sooner rather than later, as soon as you discover you are unable to pay your mortgage or if you have a change of circumstance.
2. Contact a counselor if your bank cannot help you. There is a wonderful free counseling organization called HopeNow that can help you evaluate your situation and see what options may be out there for you to peruse. You can reach them at 888-995-HOPE. You can find them on the web at http://www.HopeNow.com.
3. Investigate ALL other possible options. If you are in the military, there are options that may be available to you. You may be able to qualify for a deed in lieu of foreclosure, refinancing, postponement, or a reverse mortgage if you are older and have equity in your home. There are stalling tactics you may be able to use while you find a way to get yourself on track. There are government programs that may help you if you are unemployed. Investigate all options, but do not feel overwhelmed. If you speak with your lender or a counselor you can whittle down the available options.
4. Short sale. When there is no other option a short sale is better than going through foreclosure. You need to speak with an experienced agent if you are considering this option. Make sure you understand all tax and credit consequences – speak with your accountant or an attorney. Many lenders will bless short sales, and it is a good idea to work with someone experienced because they can try to get lender approval at the get-go. Some lenders are even evaluating homes now and telling the homeowners what price they will accept on the short sale BEFORE the home is listed. You may also qualify for programs like HAFA (Home Affordable Foreclosure Alternatives Program), which allows you to collect up to $3000 from your lender toward moving expenses.
It is important to understand the foreclosure laws in your state and the consequences they carry. If you are having difficulties with your mortgage please do not just give up – you need to try and find a solution before succumbing to foreclosure. Do not walk away from your home either, as that is a voluntary foreclosure. If you spend a little time you may find a solution that lets you avoid foreclosure, so hang in there.
If there are any distressed property issues you would like to see addressed in this blog, please let me know in the comment section below. If you do not see the comment section, simply click on the title to this blog and then scroll back down.
Tuesday, September 13th, 2011
After many real estate industry complaints that the new Obama administration recovery plans did nothing for housing (aside from refinancing assistance plans, which as we all know still require lender cooperation), out comes a plan with that goal in mind. But will this new plan really help distressed inventory and jobs, or is it merely another attempt that will eventually fall apart and leave the housing market no better off?
The new plan, called Project Rebuild, is actually not a completely new concept. Based on the already somewhat successful Neighborhood Stabilization Program (NSP), which in two parts provided grants to states and local governments (and later to non-profit agencies) to rebuild blighted neighborhoods, Project Rebuild focuses on jobs. The $15 billion program will connect out of work Americans with jobs to rebuild distressed neighborhoods, including both residential and commercial properties.
There are several problems with this approach.
1. How will neighborhoods be identified to participate? The program states that it will focus on the most distressed neighborhoods, yet there are so many areas that have these types of neighborhoods. While $15 billion seems like a lot of money, when you are talking about rebuilding homes and buildings it can go pretty quickly. Many states, like California, don’t have the money to fix all the broken neighborhoods, so while some may be helped this obviously will not make the problem substantially better.
2. How will states decide who gets these jobs? Many states have big unemployment numbers, and while the program states it will give jobs to people in the distressed areas again – this means the rest of those in other distressed areas will receive no jobs. It cannot cover everyone, and may not even be able to make a dent in jobless numbers. Also, there will likely be many people who cannot work in construction, for various physical reasons. What, specifically, are these jobs going to be, and how will they choose who gets them? What if people need training – is that part of the budget?
3. Will fixing some distressed areas really make that much of a difference in the distressed housing market? Should the feds even be involved in this? Some say that the feds need to leave the distressed markets alone, with perhaps the only exception being the need to get lenders to be more cooperative in working with distressed homeowners in avoiding foreclosure. (It is important to note there are federal programs with this goal in mind, but the fact is that the lenders still can do whatever they like, for the most part, and cooperation is not where it should be). Distressed markets can actually be good for housing, as they bring prices down so that more people can afford to buy. This can really be a blessing or it can be a problem, depending on your thinking.
I think it is fantastic to try and clean up some of those areas that have suffered the worst, and make these neighborhoods liveable once again…while at the same time providing jobs that meet that goal. We all know that there are so many people out there who are ready and able to work, and providing more jobs is a great goal. I am just not sure that this is the best way to do it, and even with private sector involvement I question whether there will be enough money to go around.
We could look at some other options. One that comes to mind is to pour some of that money into our public schools so that we can hire more teachers and reduce class sizes, bring back art and music and P.E. to many schools. Bolstering up schools is a win-win for everyone, including neighborhoods. This is just one idea, and I do think we need to do something about the lenders and the difficulties with them refusing to help people avoid foreclosure. In time, this will help heal neighborhoods as well. The fact is that we still do not have a strong program to help the housing market and homeowners.
What do you think? This is a tough call, and I would love to hear your thoughts – I invite you to comment below (if you do not see the comment box, simply click on the title of this post and then scroll down to the end).
Tuesday, September 6th, 2011
There has been quite a bit going on in the distressed property market as of late, and if you are a homeowner who is underwater or are unable to continue to pay your mortgage, there is some good news on the horizon to help you.
HAMP incentives increased for early borrower assistance: Fannie Mae has increased HAMP incentives to servicers who work out loan modifications with borrowers. HAMP – the Home Affordable Modification Program – is a program that encourages lenders to work with homeowners in issuing loan modifications. It gives financial incentives to the lenders who successfully work modifications. With the new increase, the feds are attempting to sweeten the proverbial pot to encourage even more modifications in lieu of short sales and foreclosures, and the goal is to do so early in the delinquency process. While the lenders still have to agree to issue the modifications, hopefully these extra incentives will push them toward looking more closely at modifications before rushing to initiate foreclosure proceedings.
Housing counseling agencies awarded money by HUD: HUD (The U.S. Department of Housing and Urban Development) has awarded $10 million to housing counseling agencies across the country, in order to strengthen counseling available to struggling homeowners. The money will be distributed to areas that face high incidences of foreclosures, and is good news for desperate homeowners.
Feds are telling states to design more state-specific programs to help borrowers: Several prominent economists have been sharing their view that states can do more to help distressed homeowners, acknowledging that the biggest problem in doing so is state funding. To that regard, HUD earlier this year created the EHLP – the Emergency Homeowner’s Loan Program. It, along with other federal programs, provided $1 billion to states with programs geared toward helping homeowners. Many state programs have realized great success in this endeavor, and the problem facing these programs going forward will be the federal budget situation. If you are looking for a way to get help with a distressed home situation, now is a great time to find out if there are any state programs that can assist you.
If you are delinquent on your mortgage and have not discussed options with a counselor, a Realtor and your accountant or financial planner, it is imperative that you do so. There are options available to you, but the longer you wait, the less of a chance that you may be able to reap the benefits of any of these options. The government is attempting to help you, and there are some programs available for free, such as HopeNow, the free counseling agency that can review your situation with you and make suggestions about available options. They can be reached at (888)995-HOPE.
Monday, April 4th, 2011
Always the first to stir the mix, California is once again making strides by trying to shorten the short sale process with Fannie Mae backed loans. The California Association of Realtors (CAR) is working together with Fannie Mae to help Realtors get short sale approvals in a shorter time frame by leveraging technology and an assistance desk.
With the help of local multiple listing services (MLSs), agents will be able to provide accurate comparative market analysis data to pinpoint property valuations, thus providing the comprehensive information needed for faster approvals. The Fannie Mae Short Sale Assistance Desk will assist agents with the process.
The new system aims to provide agents with a response within one week that the initial submission was reviewed. If not received in that period the Short Sale Assistance Desk will aid agents in obtaining responses from the servicer. The goal is for agents to work with the servicers first, and then have the Assistance Desk step in if necessary.
The Short Sale Assistance Desk aims to get an initial response in 20 days, final property valuations within 30 days, and a final decision within 60 days of the original offer submission. That means a maximum of 60 days for short sale approval–this could make a big difference in the market.
To qualify for assistance the following requirements must be met: the first lien on the property must be owned by Fannie Mae, there must be a valid offer on the property, the agent must have a signed authorization form from the borrower and must be a member of the MLS.
This attempt by California is testament to the fact that states will be playing a bigger role in distressed property issues. Hopefully this will have a positive effect in making short sales shorter and strengthening our markets.