Top 10 Foreclosure Avoidance Tips
Here are 10 suggestions to avoid foreclosure, both now and in the future.
1. Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your home. If you are behind on your mortgage payments or have received notice that you are behind in payments, you need to contact your lender quickly and ask to speak with a loss mitigator. Typically, your lender will mail you a “loan workout” package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.
2. A smart simultaneous step is to contact a HUD-approved local nonprofit counseling agency that may be aware of programs that could help you, may have personal knowledge of your lender’s flexibility in terms of available options, and may know the best person to contact with your lender. To find one click HUD-approved housing counseling agencies or call HUD at (800) 569-4287 on weekdays. Time is of the essence, so don’t let this step slow the process more than a few days.
3. At the same time, find out what your home is worth so you will know how much equity you have (or if its worth less than the mortgage balance). Modifications, forbearance and recasting are all possible if you have sufficient equity in your home, and if you have sufficient equity, selling the home if necessary may not be the worst idea if home values are dropping.
4. Avoid fee-based for-profit mortgage prevention companies or counseling agencies – many are rip-offs that provide few if any meaningful services for distressed homeowners, and you can get quality counseling for free. Also be wary of investors who advertise offers of immediate cash for your home. Many of them are also unethical or outright crooks, seeking to strip home equity through a variety of techniques. If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property. Never sign any legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional, or a HUD-approved housing counselor.
5. Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
6. Foreclosures are expensive for lenders, so they are usually willing to listen to reasonable ideas that can reduce their potential losses, such as restructuring the loan at lower rates or accepting a ’short sale,’ which occurs when the lender agrees to let the owner sell the home for less than the mortgage balance, and agrees to forgive the shortfall and not downgrade the homeowner’s credit. Your willingness to cooperate is a negotiating tool if your suggestions are likely to be less expensive than a foreclosure action.
7. Bankruptcy is an option, particularly if your lender is inflexible or your mortgage is on a second home or a rental property. Bankruptcy judges can reduce debts and modify interest rates on commercial loans, second home mortgages, and investment property mortgages when it is in the best interest of both parties. Unfortunately, they have no such latitude with the mortgage on your primary residence, but if your mortgage lender is inflexible, bankruptcy proceedings may be the wisest choice.
8. Even if you are current on your mortgage payments but have an adjustable loan, thoroughly review your mortgage documents, even if your reset date is many months in the future. Check the reset interest rate or formula for determining the reset rate and any future rate resets, and see if there are mortgage prepayment penalties.
9. If you think you could have trouble keeping up with the new payments on an adjustable mortgage, consider refinancing into a fixed rate mortgage if possible. Some lenders may be willing to forgive all or part of a prepayment penalty if that payment presents a problem and you qualify for their fixed rate product.
10. Don’t assume that you are immune to a foreclosure in the future. Don’t assume that a mortgage lender’s underwriting process will assure that you’ll not be approved for an unaffordable mortgage in the future. When lenders discovered that they could package and very profitably sell risky loans to investors, they became was less focused on responsible underwriting because they weren’t at risk if they sold the loans. Sound underwriting practices began to deteriorate, eventually causing the current mortgage meltdown. This could happen again. In the future you need to consider the total amount of likely monthly payments, including taxes and insurance, and be comfortable in your own mind that you can handle those payments. Adjustable rate loans are risky because you can’t control the future interest rate at the time they will be adjusted, so you need to assume the worst (in other words, a substantially higher index interest rate when they adjust) in deciding whether they will still be affordable.
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These are some great tips. Here is Michigan residents as well as Michigan businesses are facing money troubles, following these basics will help avoid foreclosure.
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Can I Really Stop Foreclosure?
Even if I Stopped Making Payments and Cannot Afford a Lawyer?
ABSOLUTELY! Most people do not realize that they can stop foreclosure even if they stopped paying their mortgage. Many recent cases have been filed improperly and an experienced attorney can assist with the identification and filing of substantive and procedural defenses with the court and vigorously defend your case. Due to the lender’s actions, omissions or other facts surrounding your case, you may be able to stop making mortgage payments and stay in your home while your attorney vigorously defends your property. This does not necessarily mean that you will not have to pay the loan back or completely Stop Foreclosure. It is possible to completely Stop Foreclosure if the bank or lender is in violation of the Florida Unfair Lending Act or other predatory lending practices. If the lender has committed such a violation, the entire principal and interest balance may be waived and the mortgage may be voided. This may not be relevant in your case. But, at the very least, a successful defense can do is buy you precious time to:
* Stay in your home
* Negotiate a work-out with the bank
* Sell your home for a fair price
* Refinance your home at a fair rate
* Continue to collect rent on the property
* Apply for a Court Ordered repayment plan
* File a Chapter 13 or 7 Bankruptcy
When home owners are faced with the reality of facing a potential foreclosure, many experience a state of paralysis. They don’t know what to do. Selling the home may not be an option since the equity appears to have vanished. To fight foreclosure or not? That is the question. Clouding the answer is perhaps the biggest misconception, “Hiring an attorney is not a cost-effective option.” If I can’t afford to pay my mortgage, then how in the world can I afford to hire a competent attorney? And why should I, if I am upside down in my home? First of all, EVERYONE can and should hire an attorney to represent them in their foreclosure case. There are many competent attorneys who specialize in this area. Due to the growing number of these cases, many attorneys have become “experts” in this area. Due to the fact that most of these cases are very similar, many excellent attorneys have experienced staff and can offer extremely affordable payment arrangements. Most people don’t know that once the foreclosure proceeding has started, the bank will not accept any future mortgage payments – doing so may adversely affect their ability to foreclose on your property. Furthermore, the bank pays any delinquent real estate taxes and the insurance on the property. In summation, once the bank files a foreclosure lawsuit, most of the homeowner’s expenses are being paid by the bank (mortgage, taxes and insurance). However, as the legal owner of the house with full possession, you have all the rights associated with same including residing in your home, collecting rents on the property, etc. Imagine the “EQUITY” you can save / build, if you fight the foreclosure case for a year or more. The cost of qualified legal representation is a drop in the bucket compared to your typical home ownership overhead. Time is money and the real estate and financial markets are likely to turn around. The hiring of the right attorney will save you thousands of actual dollars, in addition to thousands in time value of money. Its really a no-brainer.
Respectfully,
Frederick A Neustein
http://StopForeclosureLawyer.com
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