Lets Talk Foreclosures...
"Sellers In Trouble"
The headlines are staggering...
Almost a half-million Americans lost their homes to foreclosure in the first half of the year, nearly double the same time a year ago. That’s six of every 1,000 households nationwide repossessed by the bank following foreclosure so far in 2008, according to real estate information service ForeclosureS.com.
It’s a fact that homeownership is the foundation of our economy and continues to be the number one goal for many people.
It’s also a fact that the housing market got off track, unlike the typical ups and downs of the real estate market, the ball dropped and it was not the fault of home consumers. I believe that initiatives to “get people into homes”, (at any cost) backfired and hurt the very structure of our homeownership system.
So much speculation and theories exist about how we get here? One such theory is that abuse of down-payment assisted programs played a huge role, others place blame on the sub-prime lending sector. Still, others speculate that the housing market just got away from the basics – that the zero down, non-qualifying loans got people into houses; but failed to realize that getting people into houses do not make them homeowners.
Home consumers must be prepared for the rigors that are fundamental to homeownership.
STOP NOW and Let's Talk...
All the speculating on the “how”, but the reality is we are here and NOW it’s time to move forward.
Moving forward can mean different things depending on who you are, your perspective, and your goals. Sellers in trouble, how do you move forward?
First Things First...
When financial troubles visit, the key is to do something at the first sign of trouble. Waiting and hoping won’t help, a change will occur when we cause it to.
Remember, your mortgage company doesn’t want your house, they want the mortgage payment. This means that often they may be willing to work with you to resolve the situation.
Discuss your situation openly with your mortgage lender to determine what help is available to get you back on track. Remember the importance of keeping your real estate taxes from falling behind and becoming delinquent.
Since This Article Is About Foreclosures, Let’s Talk
When a borrower defaults on their mortgage payments or fails to fulfill any of the other obligations set forth in their mortgage, the lender’s rights can be enforced through foreclosure.
Foreclosure is a proceeding in or out of court, to extinguish the rights, title, and interest of the current owner(s) of the property in order to sell the property to satisfy the lien against it.
The important thing about foreclosure is that it is not an event – it is a process; the result of a series of events initiated by the lender leading up to the point of the auction and sale of the property.
Solutions - Remedies - Check It Out...
If facing foreclosure, do some research, start by contacting a HUD-approved housing counseling agency at 1-800-569-4287 for the agency nearest you. These agencies are a valuable resource and may have information on services and programs offered by government agencies. The services are generally free of charge. If you bought your home with a Veterans Affairs (VA) guaranteed loan, call the VA office nearest you.
Some possible remedies and possible discussions with your lender may include a work-out-plan, a forbearance, or re-finance, etc.
Other alternatives may include forbearance relief where your lender may be able to arrange a payment plan, which will bring your account current in a short period of time.
Pre-foreclosure sale in which you may choose to try and sell your home before foreclosure can occur. This alternative, if successful, allows you to avoid foreclosure and the effects of a foreclosure on your credit history.
Deed In Lieu Of Foreclosure...
Deed-in-lieu of foreclosure is an option where you may be able to “give back” your property to your lender. This alternative is normally better than foreclosure for both you and your lender.
A short sale can occur when the lender agrees to accept less than the amount owed against the home because there is not enough equity to sell and pay all costs.
Remember, the above are possible alternatives. All lenders may not participate and each outlined option carries with it certain ramifications when used.
Discuss each alternative with your attorney and accountant to determine how it will affect your credit history, taxes and any other issues you should know about.
I. R. S. Considerations
Never forget Uncle Sam; put the words THE and IRS together and you get THEIRS. Find out exactly what the ramifications will entail for you from a foreclosure or any other solution you choose.
Now is definitely the time to assert your legal muscle by talking with your attorney, especially before signing any legal documents.
Makes sense - your legal documents need legal advice and help! Do you know that affordable help is available through a monthly legal membership program?
Learn about the Unexpected, the Unwanted and the Unwelcomed, coined The "U" Factor; The "U" Factor...
By the way, this service is available if you should ever neet it and here is the convenient link...
Seek Immediate Help
from Housing and Urban Development (HUD) at http://www.portal.hud.gov.
More words of caution - beware of seemingly simple solutions that can turn out to be scams. You decide to sell your home without professional guidance* because you are in financial difficulty, beware of buyers who try to rush you through the process.
*as a practicing REALTOR, I'd advise against this - check out some reasons here... Why For Realtors Only
Here is one example… A “buyer” approaches you and offers to get you out of financial trouble by promising to pay off your mortgage or give you a large sum of money when the property is sold. The “buyer” also suggests you move out quickly and that you deed the property to him or her.
This “buyer” then collects rent, does not make any mortgage payments and allows the mortgage company to foreclose. This type of scam is called equity skimming.
More real estate definitions here...
Remember, just because you signed over the deed to someone else does not necessarily relive you of your obligation on your loan.
Realize that mortgage fraud exists and can be disguised in different ways – learn what is best for you and your situation. Do not allow anyone to tell you what to do or take at face value what someone tells you. Do not sign any papers you do not understand and most importantly, get help from reliable sources.
Always remember Murphy’s Law, if something sounds too good to be true – most likely it is “too good to be true”.
You don’t want to find yourself in a worse situation. Learn the facts for yourself so you won’t find yourself in the position of accepting and relying on opinions of others.
Mortgage Fraud - The Play Movie...
You (Ms. Smith)
Divorced, good income, excellent credit, purchased townhouse 5 years ago.
Entrepreneur and real estate developer.
Mr. Jones is referred to you by a business acquaintance and invites you to lunch. The topic of real estate investing comes up when Mr. Jones tells you about his current property portfolio and that he is currently looking to purchase additional property, but is at a standstill and needs some help.
Mr. Jones tells you he owns a very nice home with a lot of equity in a great area. He explains that he has a problem purchasing additional prooperty because his cash is tied up in his home.
You know a little about real estate and ask about his getting a second mortgage to pull out some of the cash equity, but Mr. Jones says that would not work as he would not qualify based on the property he owns and he would not want any more items on his credit report at this time.
Mr. Jones continues to say how much he hates missing out on some really good deals because he would hate to sell his home just to make some other deals work.
In order to get at the equity in my house, I would have to sell it, which I don't want to do. My proposition is to sell my house to you. I'll continue making the mortgage and tax payments, the upkeep, in fact I'll keep doing everything I'm doing now; all you have to do is sign all the closing documents. This way, I can pull out my cash equity so I can close a few more deals. In a year or two, I'll reclaim my house and give you five thousand dollars.
Again, all you do is sign the closing papers and basically receive money for just holding papers on my home.
STOP THE PLAY MOVIE!
Now, just like in horror shows, if you listen carefully you'll hear the music warning you that something bad is about to happen. We in the audience want to jump out of our seats and yell to the people in the movie "don't you hear that music - don't open that door" - Ms. Smith don't open that door, there is something really bad behind the door, AND, just like in the movie - Ms. Smith opens the door...
Ms. Smith explains "I already have a home I'm paying for, how can I qualify for two houses"?
Mr. Jones says that is OK. I have a lender I've worked with for years and he will help us; he will handle everything; all you have to do is sign the contract and closing papers. Mr. Jones explains that you won't have to move or have anything to do with the house, saying he'll take care of all of that because he loves his house - this is just a way to pull the equity out of it. Again, he assures you to kust keep doing exactly what you're doing now, you don't have to change a thing.
As the director of this PLAY MOVIE, I can make this call because we are going to save Ms. Smith from herself.
Now, let's examine what's involved in this play movie, it's not real - or is it?
First, the entire situation is based on lies and deceit and fraudulent activities.
Second, why would someone pay money to reclaim something that is no longer their property? If Ms. Smith goes through with this deal, it becomes her property along with the mortgage payment, taxes and the upkeep whether she lives in the house or not...
THE END (Two Possiblities):
1. Ms. Smiths thinks about what she could do with five grand allowing her greed to cover the queasiness in the pit of her stomach. After all, Mr. Jones will pay for everything and in a year or two it will all be over with little effort on her part.
1a. Mr. Jones leaves the closing with cash and he and the lender are never heard from again. Ms. Smith is left with a new mortgage, possibly facing foreclosure when payments are missed. She may face criminal charges; and never receive any of the promised money.
2. Ms. Smith thanks Mr. Jones for lunch and as politely as possible tells him that his proposal stinks. While heading to her car she thinks about the conversation and wonders who she should tell about it.
The message here ... be on your guard and be aware; never forget that the people committing these crimes work just as hard as you and I (maybe harder); and that there are many variations to the above schemes floating around.
The key is to pay attention, be aware and get your own expert professional advice. Know who and what you are dealing with...
Check this information ...
You Can Prevent Mortgage Fraud
Belief in the Strength of I AM!
Real Estate/Small Business Educator & Notary
404-840-9420 -- firstname.lastname@example.org