Stop Foreclosure

The Headline SHOULD Read:
We buy houses! If you want to sell your house thousands below market
value! We’ll make a killing!

But instead it says things like:

We can save your credit!
We pay cash!
We buy your home and rent it back to you!
My company specializes in helping people just like you!
Don’t let the bank take your home; we’ll pay you for it!

Most advertisers with ads like these are bottom feeders. They try to
profit from your misfortune. If they really cared about you they would
help you for free or maybe charge you gas money. Now I’m not opposed to
capitalism or free enterprise but I am opposed to preying on people’s
misfortunes. Let’s look at some of the above examples:

We can save your credit (for a small fee).

Saving your credit is a questionable statement. In all likelihood your
credit is severely burned already. The real deal here is that you
actually pay them to take your house. They convince you that by selling
you will be spared the foreclosure and your credit will be spared a hit.

Some of that is possible true. If the house is not already in
foreclosure, you will be spared that hit but there is a bigger picture.
If you have equity (they won’t buy the house unless there is equity) you
lose, they win. They win ALL that equity and you paid them to steal from
you.

We’ll pay you cash (to sign over the house).

Same as #1 except that you get a little cash instead of paying them some
cash. Still, you are losing on the equity in the house. I watched an
elderly woman lose all the equity in her house for a few thousand dollars
up front. She was scared into thinking she would be a homeless bag lady.
With her equity she could have bought a small older house for cash.

We buy your home and rent it back to you!

What a deal! They buy your home for pennies on the dollar and you sign a
lease to give the monthly payment amount. Most of these guys buy your
home and get financing to cover the cost. The payments are then made by
you on your own house. Many times they will flip the house with a
guaranteed renter, you.

My company specializes in helping people just like you!

It should read “My company specializes in helping separate people just
like you from their money!” That’s what they do and they do it well.

My best advice is the same advice I give to senior citizens all the time.
Don’t trust anyone that contacts you first. Only consider trust if you
initiated the contact. That includes the mail, the phone, email and
doorknockers. Ask yourself, why me and how did they find me? Bottom
feeder!

Don’t let the bank take your home; we will sell it or we’ll pay
you for it!

This one is unbelievable. These are usually unethical real estate agents.

They have you sign a contract listing the house for a set period of time
and after which the agent can buy your house at a discounted price. They
never really try and sell the house and then they will convince you that
the lack of buyer interest shows the house won’t sell for the asking
price. Your only option is to take their discounted price.

Rest assured, they already have a buyer and will flip the house as soon
as the U-haul pulls away. Always use a local real estate agent and
preferably someone that a friend or neighbor has used before.

Remember that YOU are the only person that has YOUR best interests at
heart. Think! Be cautious! Take your time and do your research!

Tags: foreclosure con artist

Foreclosures are on the rise. Nevada has the highest per capita foreclosure rate and California has the largest number of foreclosures (they have more houses). Figures for Detroit show that there is one foreclosure filing for every 51 households. That’s five times the national average. Many people are forced to ask the hard question, can I just give my house back to the bank?

This is a very common question. The process of giving a home back to the bank is called a “Deed in Lieu of Foreclosure.” As good as it sounds, not all banks will take a house back when it is offered

If you have equity in your house, you would fare better by listing the property and going for a quick sale. In many parts of the country, houses are offered thousands of dollars below market and they still have no takers. Consequently, a quick sale might not be so quick.

A California couple put their house up for sale at $100,000 below appraisal and has since lowered it 3 times to $200,000 below appraisal. After six months they are still waiting for their first offer on the property.

Before you pack that U-haul late at night and disappear you might want to consider looking into a deed in lieu of foreclosure. A lender will rarely be interested in taking a property back if more is owed than what the property is worth.

Any settlement agreement entered into must have a total consideration equal to or exceeding the fair market value of the property being returned to the lender. Most lenders will not proceed with the deed in lieu of foreclosure process if more is owed on the property than the fair market value of the property.

A borrower will benefit slightly from a “Deed in Lieu” on a credit report. The loan’s status will be closed but it will reflect that a “Deed in Lieu” was applied for. The reality is that this is slightly better than a credit report showing a full “Foreclosure.”

A distinctive plus in the process is that the foreclosure process will end sooner than if the entire foreclosure process had played out. Your credit report will show less late payments. That in itself will make it easier to rebound from the loss of your home.

If a foreclosure is inevitable, offering it back to the bank is a good idea. You will lose the house sooner or later anyway. Make the personal damage less and allow the rebuilding process a break that will allow you a near normal life sooner.

Advantages of a Deed in Lieu of Foreclosure

1) You are immediately released from most and sometimes all of the indebtedness associated with the defaulted loan.
2) You avoid the embarrassment of newspaper postings, the sheriff tacking a legal notice to your door, a court appearance and a formal sheriff eviction.

Giving the home back to the bank will not save your home, but it will help your future. And the process is less harmful to your credit report than an actual foreclosure.

The Down Side of a Good Deal

Giving the house back to the bank is a good answer to a bad problem but it does have a down side: 1099C, Cancellation of Debt.

If you borrow money from a commercial lender for the purchase of a home and later give the home back to that lender, the lender might later cancel or forgive that debt. Under that circumstance, you may have to include the canceled amount as income for tax purposes.

When you borrowed the money you were not required to include the loan proceeds as income on your tax return because you had an obligation to repay the lender. When that obligation is subsequently forgiven, the amount you originally received as loan proceeds is reportable as income because you no longer have an obligation to repay the lender. The lender is usually required to report the amount of the canceled debt to you and the IRS on a Form 1099-C, Cancellation of Debt.

Here’s a very simplified example. You borrow $10,000 and default on the loan after paying back $2,000. If the lender is unable to collect the remaining debt from you, there is a cancellation of debt of $8,000, which generally is taxable income to you.

Cancellation of Debt income is not always taxable.

There are some exceptions. Debts discharged through bankruptcy are not considered taxable income. Additionally, if you lose money from the sale or foreclosure of personal property you cannot deduct that loss.

Tags: deed in lieu, Foreclosure, foreclosure process, quick sale

Most people think that banks are content with foreclosing homes. But in actuality, they would rather have your regular cash payment than to undergo the meticulous and laborious process of foreclosing your house. So if you are facing foreclosure, the best initial move you can take is to contact your bank and establish an agreement that would be beneficial for both parties.

Banks and mortgage lenders have numerous financial assistance programs that are designed to limit the possibility of foreclosing a real estate property.

Considering that you have been religiously paying your dues on time, there is no reason for your bank not to allow you to use their financial assistance programs and back-up plans that will save your mortgage payments from later default. An arrangement could be made to help you keep up with your bills without having to sacrifice your house to foreclosure. However, this can only happen if you have an open connection with your lender and if you demonstrate enough interest in saving your house. Thus, on the first sign of problem be sure to inform your lender right away and anticipate that changes should be made on your payment terms.

Go down to the details. Make it a point that your bank or mortgage lender knows the specifics as to why you weren’t able to keep up with your mortgage payments. Reasons like severe sickness in the family, job loss or death in the family are excusable and could be considered as justifiable reasons. Also, some lenders have programs that are aimed at these specific problems.

There are other alternative options that you could use if you want to avoid foreclosure including forbearance, mortgage modification, mortgage or loan refinancing and reinstatement. All these require major modifications on the mode, terms and conditions of your mortgage payments.

There are also non-profit agencies that could support you and counseling agencies focused on loans and credits that could represent you to your creditors. These agencies are equipped with knowledge particular to issues underlying foreclosure. These groups should not, as a rule, ask for hefty payments that could add up to your existing financial problems. So be sure to check on their credibility through the Better Business Bureau to further insure you of what they are capable of doing.

Home foreclosure is not just your personal business. You and your bank, mortgage lender or creditor should be able to meet in the middle to resolve your current financial crisis.

Trying to get out of a foreclosure situation is a bit too much to handle when you are having financial difficulties. Most often in the United States, most debtors go as far as to declare a bankruptcy in court just to get out from under their debts. But for some, selling their property to stop the foreclosure as well as getting a meager earning for a fresh start can be quite appealing.

Stopping a Foreclosure

Before you aim at selling your property to stop its imminent foreclosure, there are other options available before you loose it entirely. One way to pay your debt is to meet with your lender and request a Forbearance. This method is simply defined when a lender will waive some fees on your debt so that you will be able to pay on time.

A debtor can also use refinancing as a method in paying your debt to avoid a foreclosure. You can search around for a lender which provides the best deals in refinancing loans so you will be able to pay your first loan and breathe a little easier with the extended deadline of the second.

Loan modification can also be an option to stop a foreclosure. A loan modification is somewhat akin to refinancing wherein the only difference is that your original lender will grant you a new loan to pay off the first one without re-applying.

Should You Sell?

If all these option fail, then the only solution left is to sell off your property to make ends meet with your debts. If you can find a buyer before the foreclosing date comes then you will be able to finish paying off your debt without going through the foreclosure process.

A short sale occurs when the creditor, or the mortgage holder, will approve of the sale of the property for the total market value. Lenders actually prefer a short sale rather than foreclosure since the cost of the latter is alarmingly high. And since most lending organizations are in the money-business, they would prefer a cash equivalent as payment rather than a property.

Also, this method is quite popular because if done right, you will be able to pay off your debt in full while keeping some of the profit to make a fresh start. But be warned that this method is also quite popular to those who seek to use your financial crisis for their own advantage to make a quick profit.

Where to Start?

Before you plan to sell off your property, it’s always best to know the playing field before you start the game. You first need to consult a real estate agent to know the actual value of your property. It’s safe to say that if you consult a professional first hand about the market value of your asset then you won’t fall prey to foreclosure scammers who prowl around for an easy profit.

Also, before you arrive at a set price for your property, you first need to take a closer look to how much you need to pay your creditor which might include the principal amount, interest rates, and others costs incurred by the transaction. With a specific number in hand, you will be able to find a market value for your home which will not only pay your debt in full; it will also give you enough elbow room to start over.

The Process

In case a short sale is chosen rather than a foreclosure, here are some processes that the borrower’s agent might need to make in order for the sale to push through. First off, an Authorization to Release Information must be made by the agent on behalf of the seller (debtor) regarding the approval of the sale. If a buyer is already at hand then a Purchase Contract must be made with full signatories from all parties.

A Financial Statement and a Sellers Net Sheet must be prepared by the agent to reflect the total proceeds of the sale of the property. And finally, a Hardship Letter and Documentation must be made by the seller (debtor) to explain the reason of the sale of the said property.