Can Private Companies Legitimately Help You Prevent Foreclosure?

Do legitimate companies exist that can really help homeowners prevent foreclosure and assist them in keeping their homes? The short answer is “yes.” However, although many legitimate companies can provide much needed help to prevent foreclosure, there is a darker side to this industry led by unscrupulous investors looking to profit by taking advantage of unsuspecting and desperate homeowners.
The homeowner looking for help must find the legitimate business who can keep them in their homes without losing it and the shirt off their backs. What homeowners need to avoid is the company who sails in with promises to save them from foreclosure by “selling” their home and leasing it back. In this scenario, a homeowner gives the home’s title to the company who either pays off the homeowner’s mortgage company, or assumes the mortgage with new terms. After about a year, the worst “angel” companies will increase rents higher than the homeowner’s actual mortgage payment – and the homeowner ends up losing the home anyway.
Mortgage Restructure Good foreclosure specialist companies should be able to help homeowners work with their lenders to find a solution that prevents foreclosure and allows them to keep their home with new affordable mortgage terms. This may mean brokering a mortgage modification that reduces the monthly mortgage payment by reducing interest, lengthening the term, or a combination of both.
In some extreme cases, such as job loss or high medical bills, a homeowner may even get forbearance on mortgage payments for a limited time. Forbearance is an agreement that allows the homeowner to stop paying the monthly mortgage for about three to six months. However, expect to give a foreclosure specialist some compensation for their role. Homeowners may end up paying a large fee up front for services, or even grant partial ownership in their homes to the specialist.
Short Sale If a homeowner’s situation just doesn’t allow for a restructuring of the mortgage and foreclosure is eminent, a foreclosure specialist company can work with the mortgage company to get them agreeable to a “short sale.” A short sale occurs when the home is sold for less than what is owed on a mortgage, and the mortgage company writes off the outstanding balance. Lenders who wish to avoid the extreme cost of foreclosure may be receptive to this option. Though homeowners may end up paying a fee to the foreclosure specialist, they can successfully sell the home and walk away without the mark of a foreclosure on their credit.
Mortgage Reinstatement If a homeowner can find a good foreclosure specialist group, they may agree to pay all mortgage payments in default, as well as all late fees and additional interest. The homeowner can then resume their normal mortgage payment without fear of foreclosure. However, though they save their home, homeowners face stiff interest and potential large payouts to the ‘angel.’ Payment plans can be reasonable from reputable foreclosure specialists, and it is critical that homeowners know beforehand what terms are required. This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.

Author: Patricia Payne

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Loan Modification Still the Best Option for Avoiding Foreclosure

According to the latest data coming out of the US housing market, foreclosures have risen to record figures in the first quarter of 2009. More than 800,000 properties received a default or auction notice which is a 24% rise from last year. With industry watchers saying foreclosures have not peaked as yet in the nation, more and more lenders are likely to file foreclosure notices in the coming months.
The numbers are extremely disturbing especially since a number of steps had been announced by the Obama administration since the start of the year including the much awaited mortgage stimulus plan announced in March of this year.
It would seem though that the measures so far have not been able to stem the number of foreclosures being filed every month. The main concern for homeowners has been the uncertainty they face on the job front.
Most mortgage borrowers feel that job security is the number one priority for them as without that, they would not be able to pay their monthly mortgages on time. A lot of people are ready to take a pay cut in their respective jobs rather than losing the job completely. In the given scenario, most analysts believe that a home loan modification still remains the best option for homeowners in order to avoid foreclosure.
As long as the homeowner still has a job, they should immediately contact a loan modification consultant and apply to get their mortgages modified before it is too late. If the homeowner has indeed been given a pay cut in their jobs, then it is even more important you apply for a loan modification as it would be easier to convince the banks about the difficulty to pay the monthly mortgage payments. At the same time, the fact that the homeowner still has a job, despite a pay cut, would mean the banks are more likely to modify their existing mortgages as the homeowner would be in a position to pay the monthly mortgages under the new payment plan.

The two main criteria for the mortgage lenders to approve a loan modification is whether there is a genuine difficulty or hardship in meeting the current payment plans and also the ability to pay the modified mortgage payment.
Banks are extremely cautious to make sure the homeowners would be able to meet the new mortgage payments if they approve their loan modification application.
That is the reason why homeowners must make sure they apply right away especially if they are at risk of losing their jobs.
Of course, in special cases, even borrowers who have lost their jobs and are collecting unemployment income can get their loan modified. For this you need to make sure you contact an experienced loan modification consultant who can negotiate with the bank on your behalf. The important thing though is you act fast if you really want to save your home from foreclosure.

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How Does a "Deed in Lieu of Foreclosure" Work?

A "Deed in Lieu of Foreclosure" is when a lender accepts a deed to the homeowner's property in foreclosure instead of continuing the foreclosure process and incurring more expenses to get the deed anyway. However, this does not mean the homeowner is no longer responsible for a loan deficit if the lender sells the home for less money than is owed.

This legal transaction starts after the homeowner has fallen behind on his loan payments and is in foreclosure. Even if the foreclosure has not started yet, the lender can be approached and asked if they will accept a "deed in lieu of" continuing into the foreclosure process.
Sometimes the lenders regulations require the homeowner to be behind on his payments before they will consider accepting the deed, usually 90 days in judicial foreclosure states and 30 days in non-judicial states.
Unfortunately the homeowner is, or shortly will be inundated by people trying to help with his foreclosure because he has become part of the public record and usually he is getting information from well-meaning but uninformed people.
However, he will be set upon by professionals looking to sell him foreclosure services or take the equity from his home by buying his home very inexpensively.
As soon as the homeowner notifies the lender of his impending problem or when he is 30 days late on his mortgage payment, the lender orders a BPO (Broker's Price Opinion) to determine its market value.
With this information the lender can immediately determine if he wants to take the home at the foreclosure auction, take a "deed in lieu of" or work with a loan modification or forbearance agreement to stop the pending foreclosure.
The lender will make a purely financial determination about what is best for the lender, not the homeowner. By taking the home back though the foreclosure sale, there are higher legal costs, extended loss of interest on the loan, real estate market risk, carrying and closing costs, and increased reserve requirements for the Federal Reserve.
However, if there are other open liens on the property, the lender will have to get the junior liens to assign them to the primary lender or extinguish them so they don't become the burden of the first mortgage lender.
In many cases it is simpler to go through the foreclosure process to extinguish these junior liens. The lender determines if it is quicker to accept the "deed in lieu of" or continue with the foreclosure and sale.
The lender may take the deed from the homeowner and continue the foreclosure anyway for the reasons mentioned above. In this case there is no advantage for the homeowner to give the lender the deed, especially if the lender requires the homeowner to sign a personal note for the potential deficit that the lender may incur when he sells the property.
It is not entirely uncommon for a homeowner to have junior liens that are larger than the first mortgage and in these cases, the primary lender must continue the foreclosure so the junior liens either buy him out or have their interest in the property extinguished at the auction.
If the lender agrees to accept a deed in lieu of foreclosure, the responsibility for the mortgage deficit is not finished.
The lender generally has the homeowner sign an Acceptance Agreement as well as a new deed. This agreement will stipulate that if the lender sells or transfers the property for less than what is owed on the loan (including all penalties, interest, and attorneys' fees), the guarantor of the loan (usually the homeowner) will owe any deficiency.
This deficiency amount can then be pursued in the courts as a deficiency judgment or the lender can issue the homeowner an IRS Form 1099. In this latter case the deficit becomes "Phantom Income" to the homeowner.
Federal legislation enacted in December 2007 now allows the homeowner to avoid income taxes on this phantom income under certain strict circumstances.
So is a "deed in lieu of" an ideal solution for a homeowner in foreclosure?
The answer is clearly "no" since very little is accomplished by the deed transfer because the homeowner or guarantor, is still responsible for any loan deficiency after the sale. If the homeowner does nothing, he will not have to sign the Acceptance Agreement.
By not signing this agreement, the homeowner will not be opening himself to even further liability.
The terms of the Acceptance Agreement should release the homeowner (guarantor) from future liability (i.e. deficiency amount).
The bottom line is that if the "deed in lieu of" isn't a better solution for the lender, the lender has no motivation to take back the deed.
If the lender readily takes back the deed, the homeowner should be concerned there may be substantial equity in the property that the lender will receive "free and clear".
If there are additional liens on the home, the lender does not need the deed since he has to complete the foreclosure action to extinguish them.
In summary, it is a best questionable whether it makes economic sense to give back a "deed in lieu of" unless the Acceptance Agreement clearly stipulates that the homeowner does not have an obligation for the deficiency amount.
You should not sign any documents from the lender or anyone else without having an attorney review and approve your signing.

Author: Dave Dinkel

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Foreclosure Prevention - How to save your home in 6 NOT so easy steps

OK, if you’ve found your way to this article, two things are probably true: One, you are in trouble and you’re either struggling to make your mortgage payments or you are worried that you will be struggling soon. Two, you KNOW you’re in trouble and you are looking for help to figure out the best actions to take to save your home. The good news is that you KNOW you’re in trouble. That’s an important first step. We are here to help you figure out what to do next, and in some cases what NOT to do. Below are some questions you need to ask yourself. How you answer these questions will help determine what to do next.
1. Are you are still making mortgage payments (even if you won’t be able to very soon)?
2. If you are behind on your mortgage payments, how far behind are you? Have you responded to notices sent by your lender? 3
. Do you know the terms of your loan? Specifically, if your have an adjustable rate mortgage (ARM) do you know when the interest rate will increase and the amount you will be expected to pay in future months?
4. Do you have the money to make the payments at the current amount (even though you may be in serious trouble when the payments increase)?
5. Do you know who (which financial institution) currently holds your home loan? Remember, the company that gave you the loan is probably not who owns it now.

The following steps are designed to help you save your home. But, they are not easy. They require hard work, dedication and determination on your part. You need to act quickly because the longer you wait, the fewer options you will have. So let’s get started.
Step 1: Decide to Fight for Your Home Ask yourself if you are ready to take responsibility and WORK your way through your current financial challenges. You have to be honest. You have to know how tough you really are. There will be pain. Now, if you are ready to do whatever it takes, keep reading, if not, don’t waste your time, just go watch TV or do whatever else you’d like to do while you’re waiting for your financial world to crumble on top of you.
Step 2: Build a Rock-Solid Budget on Tough, Honest Choices Write down your budget for the next several (3-5) years. This may sound hard, but do it. The word “budget” sounds like a complex plan that takes a long time to construct, but it doesn’t have to be that complicated. It’s just a list, month by month, of the money that’s coming in and the money that’s going out. What makes a budget good? Just the thought and honesty you put into it. What are you really going to make? What are you really going to spend? You will have to make some guesses. You don’t know what gas will cost next year (assume it will be more than it is now, at least 10% more each year). You don’t know how much money you’ll be making (assume it will stay exactly the same as it is right now). You will have to think (hard). What happens in January? Will you have to pay for presents? What happens in July? Will you have to pay for travel? You get the idea. Assume something will hit you out of the blue every 3 months or so (car repairs, an appliance dies, etc.). Once you see all of the “money out” items in your budget, you may need to make some hard choices. What can you live without to save your home? Step 3: Know Your Budget Like the Back of Your Hand Now that you have your budget, memorize it. I mean it. Memorize every little detail. Put it on flash cards if you have to. You should be able to recite every money-in, money-out detail if someone dumped a cold bucket of water on you at 3 o’clock in the morning. Why? So when you’re about to buy something you can ask your brain if it’s in the budget. Your brain will know the answer immediately. There will be no “maybe it is” or “maybe it isn’t”.
Step 4: Learn to Think Like Your Bank You are going to contact the bank or the mortgage lender that currently holds your home loan. But don’t pick up the phone yet! First you have to be ready to have the RIGHT conversation with your bank. You know your budget by heart (that was Step 3), now you have to learn the RIGHT way to present yourself, and your budget to your bank. The right way means that you appear to be someone who is AHEAD of the game. You appear to be someone with a clear plan (your budget). You appear to be someone who is going to be able to survive your current money problems. Put yourself in the shoes of your bank. You (the bank) has hundreds of people in trouble with their home loans. You can’t help every one of them. You are a bank, and you don’t need a bunch of homes (especially not NOW, when every other bank is experiencing the same problem). What does your bank want? They want “bad” loans to go away. They can either play hardball with you and take your home (and sell it for a loss just to make the whole painful episode end) or they can work with you, so you can keep paying. What does that mean for you? It means you have to look like someone who is going to be able to keep paying. They want to be sure you aren’t lying about what you make or what you spend each month. If there’s NO chance you’ll be able to keep up with lower mortgage payments, there’s NO REASON for them to help you! You’ll just be back in trouble in a few months anyway, and they’ll end up taking your house (foreclosure). If your bank thinks you are a hopeless cause, they’ll just foreclose now rather than prolonging the pain.
Step 5: Track down whoever is Holding Your Home Loan Contact whoever is currently holding your loan/mortgage. If they’ve sent you mortgage materials telling you how to contact them, great. If not, locate your lender any way you can (phone number on mail they’ve sent you, yellow pages, internet search, etc.). Call or write to them and tell them about your situation. Be clear about what you want (I want to keep my home. I have a clear budget that will allow me to make payments of a specific amount, etc.). If your goal is to keep your home, then make sure they know that you have a plan (the budget that you’ve carefully built and memorized). Leave no doubt that you are better than you look on paper (your credit score, your payment history, etc.). Tracking down the actual owner of your loan can be difficult. You can start by calling or writing a letter to the company that receives your monthly mortgage payments. Expect to hear something like, “We don’t actually own your loan, we just process the paperwork” from this company. In your communication with them make the following request: “If you don’t own this loan, please send me the contact information for the company that does own it.” You may have to go through several companies to find the one that owns your loan and has the power to change its terms (to freeze or reduce your payments). Do not give up. If it’s hard for you, it’s also hard for all of the other people out there who are also struggling with their home payments. You are competing with these people to be selected as one worthy of help from your lender. You should be happy that the task of finding that lender is difficult. You should be happy because other people will give up once they see that locating the lender is difficult. But you won’t give up until you find them. Be tough. Do not give up. If you reach a dead-end in your effort to locate the bank that holds your home loan, then contact the consumer affairs department of your state’s Attorney General Office and ask if they have a mortgage unit. Tell them what you are trying to do, and ask how they can help. Step
6: Respond to Whatever Your Lender Throws at You How your lender responds to your request will determine how you proceed. If they are willing to work with you, great. If they ask for more information from you, follow their instructions, and give them what they ask for as quickly as you can. If they deny your request, ask them what you could change that would make them agree to reset the terms of your home loan. It’s OK to look for help. Some of the links on this page may help you. Some of the advertisements and offers may provide information or services you can use. Shop around, learn, and explore your options. But don’t let anyone push you into anything you don’t fully understand. There are lots of companies out there that talk about foreclosure prevention or debt rescue. They may tell you that they can let you keep your home and help you pay your mortgage. They may have a plan where you can stay and just pay rent. Be very skeptical. Ask every question that pops into your head. What will really happen to your mortgage? What will happen to your credit? Make them prove that their plan is best for you. Did they ask you about your specific situation? If they don’t ask you about your specific situation (your budget, for example) how can they possibly know what is best for you? Ask to talk with satisfied customers. Some companies can provide real options that may help you. But many, many companies talking about foreclosure prevention, mortgage restructuring, loan modification and/or mortgage rescue are simply predators. They know you need help. They know you need to act quickly. They might just want the last few dollars you have. You should check out accredited debt counselors in your area. You can get a referral to a non-profit counseling agency approved by the Department of Housing and Urban Development at http://www.hud.gov. The National Federation of Credit Counselors also has a program to certify counselors. These steps are not easy. But remember, if they aren’t easy for you, they aren’t easy for other people struggling to make their mortgage payments. Be tougher than these other people. Keep going when they give up. Remember, no one can guarantee success. But giving up will guarantee failure.

Author: OneCreditCenter

Nationwide Foreclosure Assistance

A Few Mortgage Tips To Help You Prevent Foreclosure

If you fall behind on your mortgage payments, there are several steps that you can take to help prevent foreclosure. First, it's important to understand your mortgage. If you don't understand the type of mortgage you have, you'll be unhappily surprised when your payments adjust.
Adjustable Rate Mortgages are not fixed, and your payments will change, you must be aware of whether you have a fixed rate or adjustable mortgage to begin making plans. If you have a hybrid adjustable rate mortgage, you'll need to know when you can expect your payments to increase.
Hybrid and Adjustable Rate Mortgages might be refinanced to a fixed rate if you foresee that you will have difficulty making the new payments. Don't give up and be persistent. Keep contacting your loan officer and request a refinance for your loan.
Other options include devising a repayment plan with your loan officer, and can be used to prevent foreclosure. A repayment plan is effective for those who have fallen behind on their mortgage payments and would like to create a new schedule until they are caught up. You can also discuss a reinstatement plan. This enables you to arrange to pay your past due amount by a certain date, this method is also an effective way to prevent foreclosure. Forbearance is another option that should be discussed with your loan officer. With a forbearance agreement, your payments would be temporarily reduced, or even suspended for a time period that you and your loan service officer agree upon. At the end of the agreed upon time, you resume your payments and regularly meet any other stipulations that were originally agreed upon.

Author: Casey Adams

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