It is not too late to explore your options.
We regret to find people who are facing foreclosure today. We ask that you do not give up!
Once a foreclosure becomes a public record and a notice of default has been filed against your property, your lender has taken legal action against you. If you are behind in payments, we urge you to contact your lender, to clear the issue promptly.
Option 1: Loan Forbearance or Modification
A strategy worth pursuing is called a loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period.
A typical example – You owe $9,000 in back payments, attorneys’ fees, etc. Your mortgage company may accept $4,500 now and $750 per month for the next 6 months. Of course, you would have to resume making your normal monthly payments.
A loan modification is a permanent change to your mortgage that may lower your payments and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the Mortgage Company filing a foreclosure or a lawsuit. Some lenders will not consider this after filing, but it’s worth trying.
Option 2: Mortgage Rate Reduction or Loan Structuring
In most cases, when the consumer is able to make future mortgage payments (even if it is not a full mortgage payment), a loan modification and mortgage pay rate reduction is a possibility.
A loan modification involves demonstrating to the lender that a temporary situation caused the borrower to fall behind on the payments. In addition, it must show that the situation has now been resolved completely and the borrower is now eligible for a mortgage rate reduction.
This typically requires proof that the borrower earns enough household income each month to make a mortgage payment (e.g. residential lease for a room, or rooms). Loan Modification is also a great alternative for a borrower who cannot quite afford their current or upcoming mortgage payments but would like to stay in their property. In this specific situation, a mortgage pay rate reduction is an ideal solution because it will lower the monthly mortgage payment to a manageable amount.
This process is also useful when the payment on the property has not been made for a while, but the borrower is now financially able to start making the payments again.
A recapitalization agreement is a type of Loan Modification that would be most beneficial for a borrower who had fallen behind on mortgage payments. This agreement takes the sum of the arrears, fees, interest, and accumulated payments, and adds it to the principal of the mortgage loan.
Even though this results in a slightly larger principal loan amount, the borrower will now be current on future mortgage loan payments. Another option for a more affordable loan amount would be to negotiate with your lender to extend your loan for a longer period of time.
A Loan Modification will change your existing mortgage loan and give you a fresh new start in managing your home. Your account will be brought up to date immediately.
Each and every case is different, and the actual results vary.
Option 3: Reinstate Your Mortgage
You may have up to and including the morning of the auction to catch up on your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. You may be able to arrange a second mortgage to catch up the back payments and fees.
Option 4: Refinance
You’ve probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that is very difficult to arrange new financing when you’re already in default on your existing mortgage.
Be very cautious about sending advanced fees of any amount to anyone including your lender or mortgage broker. Usually, it’s a ploy to take advantage of your financial situation. Arranging new financing will depend on your income, credit report, the value of your home and the amount of your equity. If you’re not sure of the value of your home, give us a call. Usually, we can give you a fairly accurate estimate of value within a ½ hour. If you attempt to refinance, you should always have a backup plan available to you.
Many times, we have had homeowners call days before the auction stating their financing did not go through, and then it’s too late!
Option 5: Chapter 13 Bankruptcy
Available alternative if your financial situation has improved, filing bankruptcy prior to the auction will stop the sale. Unfortunately for most people, it only postpones the sale for 1 or 2 months. Immediately after filing a Chapter 13 Bankruptcy, you will have to file a repayment plan with the courts.
This plan has to show that you have sufficient monthly income to pay basic living expenses such as food and utilities and other monthly payments such as credit cards, car payments, etc. In addition, your income must be sufficient to resume making your monthly mortgage payments. All past due amounts are usually spread out between 24 and 60 months i.e. If you owe $9,000 in missed payments, attorneys fees, etc.
If spread out over 48 months this would be an additional $187.50 due each month to the court-appointed trustee. If you feel as though you have the income to immediately begin repayment of all your debts and the courts agree, this may be a good choice for you to save your home.
Over the years, we have spoken with many individuals who filed for bankruptcy protection only to have their cases dismissed. Not only were they out their attorney’s fees (usually $1,000 – $2,000) but now had a bankruptcy and foreclosure on their credit report. Bankruptcy is considered an action of last resort.
Option 6: Sell Your Home on the Open Market
This is probably the most underutilized option available to you. The fact is selling your home will give you the most money in your pocket. The market is very active and we’ve all experienced significant appreciation in the past few years. Your home may be worth a lot more than you think!
If you have recently been served with a foreclosure notice or lawsuit you may still have enough time to sell your home which will provide you and your family the greatest amount of money to help provide a fresh start for you and your family.
Don’t procrastinate; explore all the options available to you. If saving your house seems unlikely, you should call us as soon as possible! Placing your home on the market a few weeks or a month from now may not give you enough time to find a buyer and schedule the closing.
Because of the time-sensitive nature of your situation, this is not a time to go it alone as a “for sale by owner” or list your home with a friend or friend of a friend.
Option 7: We Can Buy Your Home
If efforts to save your home have been unsuccessful and time doesn’t permit selling your home on the open market or you just don’t want to but do want a quick sale with no problems, call us. We have bonafide investors that will make you a cash offer and close quickly usually in five to seven days. If you need additional time to relocate, that can easily be arranged.
You have probably been swarmed by investors calling you and knocking on your door. If not yet, you soon will be. A Word of Caution, some investors are very aggressive and unethical. Some investors will tell you that “You only have one or two weeks before the auction and your furniture and possessions will be placed on the sidewalk or street.” This scare tactic is usually accompanied by a ridiculously low offer.
The fact is you have several months before that could happen, but this is not a time to sit back and relax but for you to pursue one of the options available to you that makes the most sense for you and your family. Don’t be rushed or scared into giving up your hard-earned equity. If a quick sale of your home is your goal, talk with several reputable investors, including ours.
We can promise that we will treat you fairly, with dignity and complete honesty. When we make you an offer and say you will walk out of the closing with $1,000, $5,000, or $50,000, that’s what you will walk out with! We don’t believe in last-minute negotiating at the closing table.
If you are looking for a quick – no problem solution, call us at 877-522-7726.
Option 8: Deed in Lieu
In certain circumstances, a deed in lieu of foreclosure provides several advantages to both the borrower and the lender. Not only is the borrower immediately released from all or most of the personal indebtedness associated with the defaulted loan, he/she also avoids the public notoriety of a foreclosure proceeding and almost always receives more generous terms than he would in a formal foreclosure. Personal liability is a huge problem in most states (if you have ever had a car repossessed, you know what this means…taking the collateral is just the beginning).
A deed in lieu of foreclosure may be the best option for you if you have been unable to make your monthly mortgage payments and have had unsuccessful attempts at selling your home at market value. This procedure enables you to transfer title of your property to your lender or mortgage company voluntarily thus, giving you a way to avoid California foreclosure.
In addition, your debt or deficiency is usually completely forgiven. Although this will not save your home, it will protect your future and help you avoid the lengthy legal process of a formal foreclosure (judicial foreclosure or non-judicial foreclosure) and public record filings.
The lender will accept the property back from the borrower as full payment of the loan (under certain circumstances). This saves the lender the time and expenses of going through the foreclosure process and removing the borrower from the property. Through a complex, detailed analysis of the current and future (projected) value of the property, it may be possible to convince the lender that it is in their best interest to accept title to the property as payment in full on the loan.
Once the lender is comfortable with the actual “fair market value” of the property, they must be convinced the borrower can no longer afford to make the payments. As with a short sale, it is critical to walk the thin line between convincing the lender that at the time the borrower applied for the loan the borrower DID have the money, but the borrower has no money NOW, (thus avoiding allegations of mortgage fraud).
A deed in lieu may be a negative item on your credit report, but it is less harmful than an actual foreclosure.
Option 9: Let Your Home Be Sold on the Courthouse Steps
By far, the worst option available to you! Many people feel “I have no equity, let the bank take it”, but homes that are sold on the courthouse steps typically sell between 50% and 70% of their fair market value. Moreover, if a bank suffers a loss due to the pending foreclosure action against you, they also have an option. They can file a deficiency judgment against you and pursue you for the amount of their loss.
Typically, ten days after the foreclosure auction, a certificate of title will be issued by the courts to the new owner. If you have not voluntarily vacated your house at this time, you could be forced to move out within 24 hours.
Option 10: Short Sale Your Home and Salvage Your Credit
We all know that defaulting on mortgage payments puts the borrower in a difficult situation. Many people do not realize the options that they have available before the house is confiscated by the bank. A short sale is an alternative path to take in order to avoid foreclosure and aid in gaining time and protection, as long as it is done properly by qualified licensed professional or an attorney.
A Short Sale or Short Pay is when the lender agrees to accept a sales price of fair market value for your property despite the loan (or loans) totaling more than what the property is worth.
By agreeing to a short sale or short pay, the lender agrees to take a loss on the property and write off the difference between what was originally owed on the property and the final real estate short sales price. In many cases, this means that the lender is ending up with less than what is owed on the property to fully satisfy the loan.