Foreclosure University

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Options of Homeowners

Avoid Foreclosure With These Homeowner Options

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Avoid Foreclosure – Here are Options of Homeowners

Avoid ForeclosureThere are a ton of homeowners right now struggling to make payments and hoping to avoid foreclosure because let’s face, things just aren’t the same as they were before the market took a dive.

People are working harder and longer for about half or a third of what they use to make. Retirement accounts look about as good as they did when you first started dumping into it. Any savings has been depleted.

And now to make things worse, even if you wanted to sell your home, most homeowners wouldn’t be able to because their home is not worth what they paid for it. Yes, nearly 25% of all homeowners are underwater or upside down, meaning they owe more than what their home is worth. [Read more…] about Avoid Foreclosure With These Homeowner Options

Which is better, short sale or deed in lieu?

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Question: What is a Deed in Lieu? Which is better, short sale or deed in lieu? I am in So. California.
MS

Answer: – We explain what a Deed in Lieu of Foreclosure is in our free reports section. With a deed in lieu foreclosure you are giving the home back to the bank. By giving or deeding it back to the bank, the deed is considered full payment of the mortgage loan, so there cannot be a deficiency judgment. However, there are certain restrictions like all junior lien holders must be satisfied and there must be clear title. Although you’ll be avoiding a deficiency judgment, the bank will 1099 you for the deficient amount. This deficient amount is calculated by taking the difference between the fair market value (FMV) and the outstanding debt. As far as credit issues, a deed in lieu of foreclosure shows up as “Acquisition or Abandonment of Secured Property” and is very similar to an actual foreclosure.

A short sale on the other hand has fewer restrictions but is very similar in avoiding a deficiency judgment. You can ask the bank to satisfy the loan so it’s paid in full. You will be 1099 for the deficient amount. And for your credit, a short sale shows up as a “settled debt” which is very similar, however most credit experts believe a short sale is better on your credit report than a foreclosure or deed in lieu of foreclosure. I would have to agree…but it’s not by much. Any way you go, it’s going to be bad on your credit.

Insufficient insurance settlement from the contractors’ policy

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Question: I have a home in Florida with sever construction defects.
The house cannot be sold and does not have any real value (actually a negative value).
We have received a rather insufficient insurance settlement from the contractors’ policy.
Since the settlement was not enough to cover the existing mortgage and provide provide a new place to live we are planning to use that money to set up a new primary residence in Arizona Can we then offer a Deed in Lieu Foreclosure? Can they take our Arizona home.
PS: There is no record with the county or is there anything from the insurance company defining how we use the money.

Answer: -First lets address the whole insurance thing. As with any insurance policy or insurance claim, it’s there to be used to fix or rebuild whatever was insured. So that’ s up to you how you want to handle that. In terms of offering your lender a deed in lieu of foreclosure is definitely a possibility as long as there are no other liens or mortgages on the property. As for your Arizona home, if you didn’t pledge it as collateral for the Florida home, then no…they can’t take it. The worst they can do is sue you and file a judgment against you for the amount they lost. Very rarely happens, but it can happen.

I am in California. I missed my first payment Sept 1. I got a letter telling me to bring things current by Dec 16th. What happens now?

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Question: I am in California. I missed my first payment Sept 1. I got a letter telling me to bring things current by Dec 16th. What happens now? I am not sure when the period of redemption begins? Was I already in it? Or does it begin Dec 16 and go three months? People tell me different things and I am a single mom of four kids and need to plan. Thank-you. Nomi

Answer: -Nomi, the California redemption period is approximately 3 months and begins after you receive the notice of default. Typically you won’t receive a notice of default until you are at least 3 months behind on your mortgage, especially now, banks are slower issuing the notices of default because they don’t need any more inventory. So you’re about 6 to 8 months out from foreclosure, if it goes that far, so you do have several options as a homeowner. Unfortunately Obama’s HAMP program hasn’t turned out the way we had all hoped, however there are alternatives. Assuming you want to stay in your home, one option is a loan modification. This is something you can do yourself or you can hire an attorney to do it for you…just be careful in choosing the right attorney that really does care about your situation and will guarantee their work. Another option is to sell your home, if it has equity, and move into something smaller or less expensive until things pick up again. If your home does not have equity and a loan modification doesn’t work, you could try to do a short sale where a buyer offers the bank less than what is owed on the property. Whatever you do, don’t give up.

Are there any remedies for people who own a second home?

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Question: Are there any remedies for people who own a second home? I see a lot of help for primary home owners only. What about for people who use their own life savings to invest on real estate? Is anyone out there on the same situation with a good solution? Please HELP!!!!!

Answer: -Well, I’m sure you’re not the only one out there feeling the pain and have spent all their savings on buying homes either as investments or for themselves. The best thing you can do is work closely with your lender to see if you can do a loan modification, or try to do a lease option or even rent it out temporarily until the market turns around. At least that way you have some income coming in to pay part or all of the mortgage.

My husband passed away and left the house to me in his will…

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Question: My husband passed away and left the house to me in his will, although I am nowhere on the loan or title. I was out of work and taking care of him for a year before he died, so I got behind on the mortgage following his death in May 2008. I have been trying since August of 2008 to work with the lender(Chase)to modify the loan and have since remarried and now able to make regular payments again. I only owe $74,000 on a house worth approx. $170,000, but am having a terrible time getting any response from Chase. I have worked with Hope Now and am supposedly being reviewed by Chase for a modification. I am terrified because a sale date has been set, and my husband and I only have fair credit scores, yet have a great L-to-V ratio and income (he is a retired officer, 100%disabled USAF)but can find NO ONE willing to refinance us. There has to be an answer to this – it’s a true hardship situation since it stemmed from my husbands death last year, but I don’t know where to find help. I’ve called everywhere I know!!! Please suggest help – I’m afraid to wait much longer or they may foreclose before I find help. Thank You!!

Answer: -Even with the auction date set, you still have some options…especially if there is equity in the home. At this point, time is your biggest enemy and since the auction date has been set you have no time to play around. Unfortunately, since your credit is not spectacular, it may be difficult at this point to refinance, especially if you can’t back it up with income. As for loan modifications, it’s definitely a great option, but you should have a back up plan also. Maybe your new husband is in a position to buy the property? Maybe you have close family members that would but it, just temporarily until you could buy it back from them. Whatever you do, don’t lose it to the bank because you’ll lose most of your equity if not all of it because the opening bid is only what you owe plus some fees. If someone bids more than that amount, that money goes right to you.