How does a short sale work?

With a short sale you may have the option to sell your home for less than the amount owed on your mortgage. By doing a short sale, you may be released from your obligation to pay back your primary mortgage under its original terms. However, don't rest assured because not all homeowners who have successfully done a short sale are released from their original mortgage obligations.

Some mortgage companies may accept the proceeds of the foreclosure sale as payment in full. Your mortgage company will have to approve the short sale proposal. If you can get your mortgage company to accept the short sale of your home, then you might want to get them to state in writing if they would release you of your original mortgage obligation. A short sale can help you avoid a foreclosure sale and may be considered even if the foreclosure process has started.

Benefits of a Short Sale

There are many benefits to a short sale which is why it is a very popular way to prevent and avoid foreclosure. As the homeowner, you:

• Avoid a foreclosure sale — in some cases the foreclosure sale may be postponed once a written, signed offer is received and approved by your mortgage company
• Can live in your home until the new owner closes, giving you time to make other living arrangements
• May be released from your obligation to repay your mortgage balance

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Short Sale is a post from: Prevent Foreclosures

How does a Repayment Plan work?

Here’s how a repayment plan can make it easier for homeowners to catch up on mortgage payments.

• Your overdue mortgage amount will be spread over a certain number of months.
• During that period, your mortgage company will add a portion of the overdue amount to each of your regular mortgage payments.
• At the end of the period your mortgage account will be up to date and you will return to paying your normal amount.

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Loan modification is one of most popular option for homeowners to prevent foreclosure. With loan modification, if you can’t afford your current mortgage, it may be possible to change certain terms of the loan to make it more affordable.

Example of a Loan Modification

For example, a loan modification can change the interest rate on your home loan or the time allowed for repayment of the loan. By modifying the terms of the loan, you can usually lower your monthly mortgage payments to an amount that works for you. Therefore, you will not miss your mortgage payments and will not be in foreclosure. If you are already behind on your mortgage payments, loan modification can help you catch up and therefore avoid being foreclosed on.

Loan Modification Programs

There are multiple loan modification programs available, including the federal government’s Home Affordable Modification Program. These loan modification programs offer different options for borrowers in different situations, but all are meant to help people keep their homes when facing a significant hardship. Banks and mortgage companies usually will work with homeowners to determine whether a loan modification or another solution may work for them.

Loan Modification Help

You can also get help from a loan modification expert below.

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• You’ve kept up with current mortgage payments, but would like to lower your mortgage interest rate
• You have an adjustable rate mortgage with payments that could increase in the near future
• You have equity built up in your home (Even if you have little or no equity, you may still be able to refinance through Home Affordable Refinance Program.)

Home Affordable Refinance Program & Refinancing

Many homeowners don’t have enough equity to qualify for traditional refinance options. The federal government created the Home Affordable Refinance Program to give these homeowners an opportunity to refinance.
You may be eligible for the program if:

• You have kept up with your mortgage payments
• Your loan is owned or guaranteed by either Fannie Mae or Freddie Mac
• Your first mortgage amount is no more than 105% of the home’s current value

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How does a Deed in Lieu of Foreclosure work?

With a deed in lieu of foreclosure, you have the option to voluntarily transfer ownership of your home to your mortgage company, if you cannot sell your home at fair market value or prefer to have your mortgage company sell your home.

How does a Deed in Lieu of Foreclosure help a homeowner?

A deed in lieu of foreclosure may release you from the obligation to repay your primary mortgage and may help you avoid a foreclosure sale, even if the foreclosure process has already started.

Benefits of Deeds in Lieu of Foreclosure

As the homeowner, you:

• Avoid foreclosure
• Avoid the hassle of court proceedings
• Can move on more quickly
• May be released from liability for the remaining balance on your primary mortgage

Please bear in mind that not every homeowner will be released from liability for the remaining mortgage balance. That is why it helps to consult an expert if you have a foreclosure problem.

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Benefits of Deed in Lieu of Foreclosure is a post from: Prevent Foreclosures

My mortgage rate is fixed and I have no trouble making my payment but is there something I can take advantage of to make my mortgage terms even better.

Answer: Probably not unless you start missing payments or are heading towards a financial hardship. The best you might be able to do now with your current loan is call the bank and ask them what programs they could offer if you were expecting to start missing payments.

But anything they do to "help" you would probably do more to help the bank later on. If you can put off making some payments now, you might just end up having to pay back more later on as interest accrues.

There's very little chance they will modify the terms of the loan to make it more affordable for you. If you're on top of the payments, then they aren't in danger of losing money on the loan right now.

If you want a lower rate, you might be better off trying to get a refinance. That would help your credit, as well, by paying off one large mortgage loan with no late payments. But trying to work with your current lender just to get a lower rate or payments might result in unintended consequences that cost you more down the road.

Hope that helps. Good luck.

Refinance to Avoid Foreclosure is a post from: Prevent Foreclosures

I had someone tell me that I should be able to make partial mortgage payments and send my mortgage company a "hardship" letter to keep them from foreclosing on my house while I have it on the market trying to sell. Does anyone know much about this process? My mortgage company is the horrendous EMC Mortgage Co. - it doesn't get much worse than them.

Answer: You need to call your lender and ask them. Some lenders will accept partial mortgage payments and work with you.

Partial Mortgage Payments to Prevent Foreclosure is a post from: Prevent Foreclosures

I am in the process of having my home foreclosed. I have been in contact with the lender but need more time to come up with the funds to make things current. In Pennsylvania you are allowed an extension on foreclosure, but I do not know what this "extension letter" to prevent foreclosure is supposed to say.

Answer: A letter of extension is something that is put together by the bank - not by the homeowner.

What you might be thinking of is a Hardship Letter - this is a letter drafted by the homeowner to demonstrate their financial hardship, and is usually accompanied by a financial statement. These letters are normally used for Short Sales (when a bank forgives a certain amount of debt to allow the sale of the house to go through).

There are a lot of options besides foreclosure. To be brief I will list a bunch, instead of trying to explain one or two:

1. Rent out a room (or the whole house) and pay out whatever you owe at the end of the month.
2. Negotiate a forbearance. It is free to you, and all it requires is that you contact your lender and ask for a repayment plan or even absolution of some of the amount past due. Also there are non-profit organizations that will help you negotiate a forbearance – such as the Home Owner Preservation Foundation (HOPF)
3. Refinance for better set rates, and/or a longer loan (40years).
4. Sell via non-traditional means: lease option, wrap-around mortgage, rent to own, five day sale, auction, etc. There are more ways to sell a house besides just using a Realtor.
5. Short sale – selling for less than the amount owed on the mortgage.
6. Sell to an investor - especially someone who knows how to do a short sale. Investors are easy to find - just go through your local classified ads and find the ads that read "I buy homes".
7. Deed in Lieu - Volunteer to give your loan to your bank in lieu of them foreclosing - saves them thousands, and saves you a foreclosure.
8. Declare Bankruptcy - 2nd least favorable, you will get rid of your debt (or be given a tenable repayment plan), and it will stop the foreclosure process, but it won’t erase the mortgage (and as of right now, won’t restructure your mortgage either) and you could have a credit hit almost as bad as foreclosure for 10 years.
9. Do nothing - the banks will take care of everything else! (AKA - foreclosure – the worst credit hit you can have, and seven years before you can petition to have it removed).

Extension Letter to Prevent Foreclosure is a post from: Prevent Foreclosures

What are the rules to prevent foreclosure?

Answer: The only way to really stop foreclosure (if you are in foreclosure already) or prevent foreclosure if you are close to being in one is to make the payments. No bank really wants to foreclose and many are dragging their feet on tossing deadbeats out into the street. You're in luck there and maybe by calling the bank and working out a plan they will not have to put your file into their non performing pile. Offer to make at least 1/2 of the arrearage up immediately and they will know you are serious.

The magic number is 3 missed payments and your there now, they might hardline you some but keep in mind they want to get paid without foreclosing. Right now banks are bending over backwards to work out issues with bad loans. DO NOT FILE BANKRUPTCY or you will lose the home and in most cases even sooner than through a typical foreclosure process. The rules to prevent foreclosure were in your loan docs you signed.

What to do to Prevent Foreclosure? is a post from: Prevent Foreclosures

I have not been able to pay for mortgage for a couple of months due to harsh circumstances and I heard that there are many government grants available to prevent foreclosure. Can someone please tell me about government grants that I can trust. I really don't want to lose my house. I would truly appreciate any help or advice that you can give me. Also if there are grants or programs that I should not trust please tell me about them. Thank you.

Answer: If your home is a Fannie Mae insured loan call your lender, they will know, and inquire about the "Homesaver Advance" program. You may have to talk to a Supervisor as the front line often has no clue. It will act as a 2nd or 3rd mortgage but bring you completely current. It is repaid over 15 years at just 5% interest and your first payment is not for 6 months.

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Government Grants to Prevent Foreclosure is a post from: Prevent Foreclosures

I have a friend who has lived in her current home for over four years and was sold a Power Option loan, but was told it was an Interest Only loan. They are pretty much backwards on their mortgage and in major credit card/ car loan debt. I just found out that they will be losing their home to foreclosure at the end of the month, and they will file bankruptcy.

Is there a way we can help to keep their home from foreclosing? Any help, or tips is wonderful!

Answer: Bankruptcy should be a last resort. There are many ways to stall foreclosures or even have them thrown out. For example... Simply filing the intent of filing bankruptcy will stall the foreclosure for at least 30-60 days if not more. There are many other things that can be done as well... too many to list here. Check out some books on how to prevent foreclosure.

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What are the steps of filing bankruptcy to prevent foreclosure besides paying an attorney to do it for you?

Answer: Not at all, if you want to keep the house you have to pay for it.

Filing for bankruptcy protection will not prevent foreclosure. It will slow it down a couple of weeks or months though depending on your bankruptcy case. Filing bankruptcy is serious so you need to read more about it in order to determine if it's the right move for your situation.

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One of my friends is in pre-foreclosure soon and I was wondering if they convert their deed into a LAND TRUST it will save them from any liens or foreclosure. Can anyone please help? Greatly appreciated thanks.

Answer: Of course not. If that were the case, then everyone would be placing their properties into land trusts, and there would be no foreclosures. Learn more about land trusts and find out what it can do and cannot do for you.

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Answer: Not necessarily, what you can do is ask them for a loan modification that will help you maintain your credit, not have a late payment and keep the house. In order for you to have a short sale, you will most likely have to be 90 days late to start the procedure. Talk to your bank and see who you can speak to about a loan modification or speak to an attorney (real estate, title, etc..) to help you with a modification.

Short Sale Without Hurting Credit is a post from: Prevent Foreclosures

I'm in the process of purchasing a home that is a short sale. It's been 5 months since the bank took our deposit and we are still awaiting a final approval. I've been told that it has now been passed onto a "short sale mortgage arbitrator"? Am I even using the correct term here?

Answer: A short sale basically means your agent presents a proposal to the bank and goes "hey, come on, you know you can't get the whole mortgage amount for this house now, take less, take our deal now". The bank, obviously, wants as much out of you as possible. This short sale mortgage arbitrator should: 

• be independent,
• examines the circumstances,
• examines what the bank owes,
• examines what you present,
• examines what the market is,
• arbitrate the differences, and
• come up with a number you all can live with.

Short Sale Mortgage Artibrator is a post from: Prevent Foreclosures

I am in need of refinancing our home. We are currently almost 2 months behind on our mortgages. We stopped the foreclosure in October but are headed that way again if we don't find a way to refinance. When we stopped the foreclosure in October we thought it was paying for Novembers payment too but it wasn't so we were behind a month again right off the bat. We have a first and second mortgage we want to consolidate them. We also have an adjustable rate mortgage that is killing our finances. We filed bankruptcy almost 7 years ago. This is my dream home and don't plan on leaving it until I go in a box in the ground. If anyone knows anything that would help I would be very grateful.

Answer: Yes, there are people who do that, but your rate will be 14% or way more.

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my boyfriend's home is currently in foreclosure and he is about six months behind on the mortgage payments ($6k). he's tried to get a loan modification program with his lender, but he says they're a real pain to deal with. He has about $20k equity in the house - any chance he could refinance and use the equity to cover what he owes?

Answer: Your boyfriend's best option is to stick to the loan modification, no matter how much of a pain it is and how difficult it will be in dealing with his lender. Foreclosure refinancing is pretty much out of the question, even with your existing lender, because of the 6 missed payments. It doesn't matter if your boyfriend has equity in the property, the lender will still consider him for a modification if he has a legitimate financial hardship i.e.

• loss of job,
• reduced income,
• illness,
• unexpected medical expenses, etc.

I understand that lenders are difficult to deal with but it's better than the alternative..... foreclosure! Your lender may even offer a TEMPORARY solution, a forbearance plan, but insist on the loan modification. If they will only offer the forbearance, make sure the repayment period is spread out as long as possible and/or that the payments are LESS than what he's paying now and not MORE, i.e their catch up plan, where they add the past due amount owed into his existing monthly payments making his obligation more on a monthly basis.

Or see if they'll add the past due amount into the balance of his loan, bringing him current, and continuing to make the same payment (or less, if possible by re-amortizing the loan out over a longer period). Another option is to consider renting out a room, depending on how big the property is. Good Luck!

Foreclosure Refinance is a post from: Prevent Foreclosures

Lenders to consider

• Commercial banks
• Savings banks
• Mortgage companies
• Credit unions
• Life insurance companies
• Stock brokerage houses
• Hard money lenders
• Individuals

Each lender that you talk to will have different loans and different interest rates to offer. You need to inspect all the details of the loans they are offering and compare them against each other. You need to shop around. Do not think that you need to take any loan that comes your way just because you are in foreclosure and you do not have a choice. Do shop around and do compare all the loans on the table. Now that the interest rates are low, you may be able to find better loans and better interest rates.

Shop around!

It is important that you shop around. Do not sign anything until you have been on your computer a long time looking around and shopping for the best loans and the best rates. We have introduced many books on refinancing and loan modification so you should be familiar with what are out there. Knowledge is key and do not be pressured into getting a loan that might not be the best for your situation.

Talk to a reputable Realtor

If you are in foreclosure, do not be afraid to ask a Real estate agent for help. A Realtor can be a great resource for you even if you do not buy or sell with him or her. A Realtor is often very helpful and has lots of contact and connections. He/she can give you the names of banks, mortgage brokers, and other institutions that give great loans for people in similar situations to you. A Realtor can advice you on what you can do and what your options are.

If you are ready to talk to a Realtor about your situation, use the free service below to find one.

Save on REALTOR® Fees. Let listing agents compete for your business!

Finding a Lender to Refinance Out of Foreclosure is a post from: Prevent Foreclosures

So You Want to Refinance: An Insiders Guide to Refinancing Adjustable Rate Mortgages and Home Loans

There are many homeowners with horrible mortgages and they want to refinance. By refinancing, they could lower their monthly payments. Many have refinanced and reduced their mortgage payments by half which help them afford the payments and prevent foreclosure. The problem is that, there are people who fall for bad deals again even when they are refinancing. So, there are lots of things you need to know before you refinance and the more you know, the more prepared you are at choosing the right loan for yourself. Don't let the mortgage company recommend a loan to you without you verifying that it is a good loan. Too many homeowners do not verify and end up with loans that will come back to haunt them later on.

Buy So You Want to Refinance: An Insiders Guide to Refinancing Adjustable Rate Mortgages and Home Loans

So You Want to Refinance is a post from: Prevent Foreclosures

Buy Credit After Bankruptcy: A Step-By-Step Action Plan to Quick and Lasting Recovery after Personal Bankruptcy

Credit After Bankruptcy is a post from: Prevent Foreclosures