Archive for category Deed in Lieu of Foreclosure

Short Sale Fail – A Series: Intro

Short Sale Fail – A Series on Questionable Things I Run Into With Short Sales: Intro

  I daily run into behaviors, responses from “experts”, forms required by “experts”, etc. – things that make me scratch my head when I am working with short sales. Not always are these things that I run into worthy of an entire blog post but I figured I would create a series to at least allow for brief posts discussing/presenting these things.

This is a series that I will revisit as time permits that is good information for both Buyers and Sellers in considering the short sale process. Short Sale Fail obviously suggests that I will at the very least bring into question some of the practices, forms, designations, etc. discussed.

Please touch base if you are considering buying or selling as a short sale. 208.830.6185

*This is not to be construed as legal or financial advice and you should seek qualified council regarding any financial or legal questions.

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The Mythical Loan Modification

Below is a video created by and featuring Lee Honish, former Head Loss Mitigatior for IndyMac, now OneWest Bank on the reality of trial loan modifications. This is the scoop on loan modifications. Weekly I work with clients who attempted a loan modification but mysteriously after the trial period ended were denied the loan modification and helped down the road to foreclosure by the very bank that said they were “helping” them.

Are you facing foreclosure? Lets talk soon…

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Alternatives to Foreclosure

Alternatives to Foreclosure

You may be facing foreclosure… so what are your options?!?  Try to look at the situation more from a financial standpoint rather than an emotional standpoint.  This way you can more successfully analyze which option might best suit your needs and desires to move you towards resolving your financial difficulty.  One very important thing to remember: Time is of the essence. Take time to think through your situation and make a decision.  Then, take action right away so you have enough time to complete the solution you choose.

 

Nine options when facing Foreclosure

1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction.  Loan applications generally ask if the applicant has ever been foreclosed upon.  Credit reports also disclose this damaging information. Not the best option.

2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees.  Usually this is accomplished through a refinance of the debt.  New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default.  With this option, there should be equity in the home.

3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan.  This may allow the homeowner to catch up at a more affordable level.  To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation.  The lender may even be able to provide a temporary payment reduction or suspension of payments.  Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6. Partial Claim – A loan from the lender for a 2nd loan to include back payments, costs and fees.

7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing.  Banks generally require the home be well maintained, all mortgage payment and taxes must be current.  Most loan applications ask if this has ever happened.

8. Bankruptcy – This option can liquidate debt and/or allow more time.  I can refer you to a qualified bankruptcy attorney.

–Chapter 7 (Liquidation) To completely settle personal debt.

–Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

–Chapter 11 (Business Reorganization) A business debt solution.

9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale.  In this case, the homeowner will get cash from the sale.  On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value

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