Showing posts with label Refinance. Show all posts
Showing posts with label Refinance. Show all posts

Monday, April 5, 2010

How To Stop Foreclosure

How To Stop Foreclosure

Homeowners and real estate owners who are in foreclosure, or who have received a letter from their mortgage lender's attorney stating that the foreclosure process will begin, or have received a notice of default frequently ask me how they can stop the foreclosure. Therefore, I listed the best ways to stop a foreclosure action below depending on whether you want to keep your home or investment property.

Options if you want to keep your home or investment property:
  • Mortgage Refinance - If you have not missed a payment yet you still may be able to refinance into a more affordable loan. You should investigate this option as soon as you know that there may be financial trouble as this option will only remain viable for a short period of time. If your home is worth substantially less than the mortgage(s) you need to refinance this option will not work.
  • Loan Modification - Contact your mortgage lender as soon as you miss a mortgage payment and ask about their loan modification options. Don't expect much help, though, as most loan modification requests are not approved.
  • Loan Forbearance - If you are denied for a loan modification due to your financial issue being temporary you may be able to get a loan forbearance agreement with your lender. Basically, forbearance is a temporary reduction in your mortgage payment (usually 3-6 months) where the part of the payments that you did not make (i.e. the difference between the normal payments and the reduced payments) is added to the final forbearance payment. Due to the large final payment, this option most likely only a temporary way to stop foreclosure. However, getting the foreclosure stopped is absolutely necessary so that you can review other options (see below).
Options if you do not want to (or or not able to) keep your home or investment property:
  • Short Sale - A short sale is a sale of real estate where the sale proceeds are not sufficient to pay off the liens on the real estate (usually the mortgage(s), tax liens and unpaid HOA and condo fees). This is the best way to proceed in that you can frequently, but not always, get the mortgage debt(s) fully satisfied and get released from any future obligations. A short sale is also less damaging to your credit than the other options. If you decide that a short sale is your best option I highly recommend that you chose a REALTOR who specializes in short sales (i.e. not a traditional REALTOR, or neighborhood expert), or a short sale investor. In either case, you need someone who knows how to close short sales since they are very different than regular real estate sales.
  • Bankruptcy - If you have a lot of unsecured debt (i.e. personal loans, credit cards, unpaid bills, collection accounts, etc.) and just need to buy time to evaluate other options a bankruptcy could work for you. Please know that bankruptcy will not save your home. It will only delay the foreclosure unless the lender wants to work with you. Due to the complex laws which regulate personal bankruptcy, you will need to contact a bankruptcy attorney.
  • Deed in Lieu of Foreclosure - Basically, a Deed in Lieu of Foreclosure is where you deed your home directly to your mortgage lender in exchange for them stopping the foreclosure. While this option is better than foreclosure, at least from a credit score standpoint, it will usually not get you released from the debt and probably will not work if you have other mortgages on the property.
Please note that all the options above will be slightly more difficult for real estate investors than they are for homeowners.

Short Sale and Foreclosure Help and Assistance for Homeowners and Property Owners in Nashville TN and Middle TN. If you are a Nashville Tennessee, Franklin Tennessee, Brentwood Tennessee, Nolensville Tennessee, Spring Hill Tennessee, Murfreesboro Tennessee, Smyrna Tennessee, La Vergne Tennessee, or Middle Tennessee homeowner, property owner, condo owner, real estate investor, home builder or real estate developer who cannot pay your mortgage payments (due to losing your job, having your income reduced, illness, health problems, adverse business conditions, slow sales, loss of investment property tenants, vacancy issues, lack of funds to complete the project, feuding business partners, etc.), know that you will not be able to pay your mortgage, have defaulted on your mortgage, are already in foreclosure, or owe more than your home is worth, please contact me to discuss your options including a loan modification and a short sale (a real estate short sale occurs when the sale proceeds are not sufficient to pay off all the mortgages and liens on the property/home). I am a Middle Tennessee distressed real estate, short sale, pre-foreclosure (preforeclosure) and foreclosure REALTOR and Expert. I primarily help sellers (homeowners, property owners, condo owners, owners of high end homes and properties (estate homes, luxury homes and executive homes), real estate investors, home builders and real estate developers) of distressed real estate, short sales, pre-foreclosures, foreclosures, investment properties, failed new construction projects and struggling commercial real estate developments located in Middle Tennessee (Rutherford County TN, Williamson County TN, Davidson County TN, Robertson County TN, Maury County TN, Murfreesboro TN, Smyrna TN, La Vergne TN, Eagleville TN, Lascassas TN, Rockvale TN, Christiana TN, Brentwood TN, Franklin TN, Nashville TN, Belle Meade TN, Nolensville TN, Spring Hill TN, Gallatin TN, Springfield TN and Mt. Juliet TN). If you do need to short sell your home or property, or you need a quick sale due to being in foreclosure, you can request short sale and foreclosure help and assistance on my website at Get Short Sale and Foreclosure Help and Assistance from a Nashville Tennessee and Middle Tennessee Short Sale and Foreclosure REALTOR and Real Estate Expert.

Thursday, March 5, 2009

New Government Programs to Reduce Home Foreclosures

According to the article U.S. Sets Big Incentives to Head Off Foreclosures on the New York Times website the Obama Administration unveiled two new plans that will help many in people in foreclosure.

In my opinion neither plan will not solve the foreclosure problem.  The problems with the plans are as follows:
  1. Investors are excluded.  Since many foreclosures, particularly in Florida, Nevada, Arizona and California were from investors (actually speculators) those foreclosures will continue.
  2. Second homes and vacation homes are excluded.  Since many people not only purchased too much home for their budget, but also too many properties (i.e. second homes and vacation homes) they got into financial trouble.  Since the plans do not cover these owners the foreclosures will continue.
  3. Many people who are in foreclosure are there as a result of not being financially responsible.  I have personally seen people with combined incomes of almost $100,000 not be able to pay mortgages payments of $2,000 to $2,400 per month (includes principal, interest, taxes and insurance).  The Obama plans allow for mortgage payments to be as low as 31% of a person's income via paying matching funds to the lenders.  The numbers I show above are less than 31% yet those people still did not pay.  The reality is that the housing payment is only one part of the problem.  Typically, these people had a lot of other debt and just spent recklessly.
  4. Both plans require that the home owners have enough income to pay the modified payment.  This is meaningless if the people have lost their job due to health issues or the current economy.  For a while now health issues which cause a person to lose their job have been a big factor in foreclosures.  Since the plans require that people have a job people in this position will not be helped by the plans.
  5. Plan 1 (Refinancing for Strong Borrowers) limits the total new loan to a maximum of 105% of the home's current market value.  Since many people now owe far more than their home is worth even if they are current on their mortgage payments they will not see any help from Plan 1.  The result will be that these homeowners will eventually slip into foreclosure as the market value of their home declines.
  6. Plan 2 (Loan Modifications for At-Risk Borrowers) does not place a limit on the loan amount with respect to the market value of the home, but it limits the reduced modified payments to a term of 5 years.  After 5 years the interest rate will probably reset to today's market rates.  The problem is that for may people they still will not be able to pay the market rate in 5 years.  Also, this Plan fails to address the issue of what happens when the people cannot pay the modified mortgage and the loan amount is still greater than the market value.  In short, this plan is betting that the market values will substantially improve in 5 years.
  7. Neither plan addresses the core reasons of why we are in this mess to begin with.  The core reasons are: (1) Homes and real estate just got too expensive as a result abnormal demand caused by what I call "housing euphoria" which resulted from an increase in the homeownership rate that was enabled by loose credit standards.  (2) People started buying homes that they could barely afford even with a 2 income family so there was no room for any job loss.  (3) People purchased homes with risky adjustable rate mortgages in order to allow them to buy more home in the short run without regard for any rainly days or "what if's".  (4) People just borrowed and spent too much in general.