HOW DO I AVOID FORECLOSURE? WHERE DO I START? PART 4
How Do I Avoid Foreclosure: Part 4
A step by step process for distressed homeowners.
This is the fourth in a series of posts designed to be a step-by-step directory for distressed homeowners to use to try an avoid foreclosure.
We continue the discussion of various options that a distressed homeowner may have. Some of these options only apply to homeowners in very specific situations and will not apply to most; however, if you meet the criteria you should take advantage of any opportunity that presents itself.
Rent the Property
This is an option that will work if you can rent the property to a tenant who can meet their rental commitment long
term. The danger in an economy with over 10% unemployment and 26% underemployment is that the tenant can lose their job or take a pay cut in order to keep their job. If that happens, the rent checks are likely to stop coming in while the mortgage payments are still due each month.
Over 40% of home in foreclosure were not owner occupied, meaning that they were rentals or vacation properties. When the rent checks stopped coming in the owners could not continue to make their payments and lost the property to foreclosure. The F word has a major impact on their ability to buy anything on credit for seven to ten years.
The issue of cash flow is also important. Not all homes will rent for enough to cover the mortgage, taxes, insurance and upkeep. Many landlords try to cover the mortgage payment with rental income and have to cover some or all of the taxes, insurance and upkeep with income from other sources; a difficult thing for most of us to be able to do long term.
Refinance
This option becomes increasingly more difficult as housing values decline. A few years ago, when home prices were increasing in leaps and bounds 100% financing was easy to obtain. Today, lenders want to see some equity in the property before they will even consider a loan. Lenders want to see an 80% loan-to-value ratio; that is to say, that they will loan up to 80% of the current market value on a property if all other factors are acceptable. Some will consider going up to 90% of current market value in rare circumstances, but they will charge higher interest rates. It is the risk/reward issue. The higher the risk, the greater the reward to the investor.
Unless you have an equity position of 20% or more given the present market value of your property, refinancing will be very difficult at best.
If your equity position is less than 10% it is not an option.
Here are links to a few web sites with helpful information for less specific situations:
http://portal.hud.gov/portal/page/portal/hud/topics/avoiding_foreclosure
http://www.ForeclosureStopper.org
In future posts we will discuss other options people may use to avoid foreclosure. Those posts will be coming soon.
Feel free to contact Mike West, Realtor, CDPE if you have any questions or need help.
(916) 337-0658 e-mail: Mike@BMikeWest.com
HOW CAN I GET THE BEST DEAL ON A HOME? WHERE DO I START?
How can I get the best deal on a home? Where do I start?
“The home buying process can be daunting. There are many variables involved and my home purchase is likely to be the largest that I ever make. I don’t want to make any mistakes and I DO NOT WANT TO PAY TOO MUCH”! Does this sound about right?
Thousands of prospective home buyers ask themselves these questions every day. Most understand that home ownership has both benefits and drawbacks. A monthly house payment is almost always going to be more than rent. “How is it going to affect my lifestyle? If I do make a purchase, am I going to be house poor for the rest of my life? A home purchase is a major commitment, am I ready for that?”
One of the major advantages of home ownership is long term appreciation. Although the downturn in the market 
over the past few years belies the fact, single family homes appreciate 6.7% per year on average, and have so for the past seventy-five years or more. Buying a home now, after a major market correction, is likely to put the buyer in an excellent position to reap the benefits of that long term appreciation in a few years. And don’t forget the tax advantages of home ownership. Both interest and property taxes are deductable. So Uncle Sam and the Governator pitch in to help you make that house payment each month. Finally, when you buy it, it is YOURS. You can paint it any color YOU want; you can change it any way YOU want. There is no landlord making up rules that you have to follow: The American Dream.
Once you decide that the possibility of home ownership warrants a little investigation it is time to do some research. Today, most potential buyers start their search on the Internet. There is so much information available the one can get overloaded quickly.
If you take it one step at a time, with an organized approach, things will fall into place more quickly than you might think. The purpose of this Blog thread is to help the prospective buyer with that organized approach. Every few days a new piece of the puzzle will be added.
Feel free to ask questions at any time. Every buyer’s situation is different and there are over 500,000 licensed real estate agents in California ready and willing to help. Some of them even pursue the trade on a full-time basis, although that number has declined markedly over the past few years. Of course, I would like to think that I am your best selection!!
Tune it for the next segment.
HOW DO I AVOID FORECLOSURE? WHERE CAN I GET HELP? PART 3
How Do I Avoid Foreclosure: Part 3
A step by step process for distressed homeowners.
This is the third in a series of posts designed to be a step-by-step directory for distressed homeowners to use to try an avoid foreclosure.
We continue the discussion of various options that a distressed homeowner may have. Some of these options only apply to homeowners in very specific situations and will not apply to most; however, if you meet the criteria you should take advantage of any opportunity that presents itself.
Forbearance or Repayment Plan
The reinstatement option discussed (in post # 2) in this series is limited to those very few who, after going in to 
default, can come up with a large, lump sum cash payment to get their loan back on track.
This option is likely to work for a larger number of distressed homeowners. The hardship causing the borrower to miss one or more payments must be resolved. The borrower must be able to prove that they have the income to continue to make the required payments.
The borrower must make up all of their missed payments, pay late fees and any other fees the lien holder charges. However, in this option, rather than making a lump sum payment they ask the lien holder to allow monthly payments of the total reinstatement balance, usually three to twelve.
Naturally, the lien holder must approve this option. Bear in mind that these payments will be in addition to the regular monthly payments.
So, for the time it takes to repay the reinstatement balance the total monthly payments will be very large.
The danger here is that if only one of the payments is missed, or not paid completely, the borrower goes right back to the same stage of the foreclosure process where they were when they started to make the forbearance payments.
This is difficult for most borrowers, but some use this option successfully to avoid foreclosure.
Sell The Property
This option was probably in the back of many borrower’s minds as an exit strategy if they got into trouble, when they really did the financial stretch to buy their dream home. It can still work IF conditions are right.
In order to sell the property the current market value of the property has to me high enough for the seller to satisfy all liens against the property, plus commissions and all closing costs. Today few will qualify.
Here are links to a few web sites with helpful information for less specific situations:
http://portal.hud.gov/portal/page/portal/hud/topics/avoiding_foreclosure
http://www.ForeclosureStopper.org
In future posts we will discuss other options people may use to avoid foreclosure. Those posts will be coming soon.
Feel free to contact Mike West, Realtor, CDPE if you have any questions or need help.
(916) 337-0658 e-mail: Mike@BMikeWest.com
How Do I Avoid Foreclosure? Where Can I Get Help? Part 2
A step by step process for distressed homeowners: Part 2
This is the second in a series of posts designed to be a step-by-step directory for distressed homeowners to use to try an avoid foreclosure.
We will discuss the various options that distressed homeowners have. Some of these options only apply to homeowners in very specific situations and will not apply to most; however, if they apply to you should take advantage of any opportunity the presents itself.
Reinstatement
If the reason the borrower missed one or even a few payments was temporary and has been resolved, they may decide to have their mortgage reinstated. In order to get back on track the borrower must make all of their missed payments, pay late fees and any other fees the lien holder charges.
The borrower should contact their lien holder, explain the nature of their situation and request specific information
about what is require to get back on track. Expect there to be legal and processing fees on top of the late fees.
The late payments will be reported on your credit report, but those are not nearly as damaging as a foreclosure will be. After two years lenders do not consider “mortgage lates” when deciding to extend you credit.
Once you make the necessary payment you will have avoided the foreclosure. The collection calls will stop and you can get on with your life.
Service members Civil Relief Act (SCRA)
In December of 2003, this Act was signed into law. It provides protection for military personnel in specific situations. It is designed to provide temporary relief from paying a mortgage if the criteria are met.
For specific information you can go to:
http://www.USCG.mil/legal/la/topics/sscra/abput_the_sscra.htm
It is appropriate that those in the military are afforded some kind of protection while they are defending our country.
Here are a few web sites with helpful information for less specific situations:
http://portal.hud.gov/portal/page/portal/hud/topics/avoiding_foreclosure
In future posts we will discuss options to provide the information people need to make an informed decision. Those posts will be coming soon.
Feel free to contact Mike West, Realtor, CDPE if you have any questions or need help.
(916) 337-0658 e-mail: Mike@BMikeWest.com
HOW CAN I AVOID FORECLOSURE? WHERE CAN I GET HELP? Part 1
How Do I Avoid Foreclosure:
A step by step process for distressed homeowners.
Part 1
“O.K., I’m in trouble, real financial trouble. Due to circumstances beyond my control I can’t pay my bills. The mortgage is due and I can’t come close to covering the payment. What can I do”?
Unfortunately this scenario is playing out with thousands of home owners in our country today. In fact, one in ten mortgages throughout the country are in trouble with even more headed in that direction.
Unemployment is at 10.2% and underemployment is at 20% in California. Many of the wild west mortgages of the past few years are due to adjust, making the payments impossible to make for an ever growing number of borrowers.
Homeowners need help in the form of information and education. Unfortunately, this is such an emotionally devastating situation many people shut down and do nothing. The cold hard truth is that doing nothing is a sure fire formula for losing their home to foreclosure.
And foreclosure is not just a one time event. Once a foreclosure is on you credit record it stays there for seven to ten years, making it difficult to obtain any kind of financing (home, auto, credit card, store card). Those in this situation that do obtain credit are looking at interest rates well into the double digits. People should do EVERYTHING POSSIBLE to avoid foreclosure.
We have to get the word out family, friends and neighbors that there are options available to them to increase their chances of avoiding foreclosure. The thing is that they have to take action.
There are many organizations available and willing to help without charging a fee. Unfortunately, there are also far too many who will take advantage: fraud is rampant.
The bottom line is that the distressed homeowner has to take action and be careful not to let an individual or organization taken advantage of them.
Contacting the lien holder and discussing your situation honestly is absolutely necessary. However, before doing that there are a few steps to take first.
Take some time to learn what all your options are first. This information is available in many 
places.
Here are a few web sites:
http://portal.hud.gov/portal/page/portal/hud/topics/avoiding_foreclosure
http://www.ForeclosureStopper.org
In future posts we will discuss these options to provide the information people need to make an informed decision. Those posts will be coming soon.
Feel free to contact Mike West, Realtor, CDPE if you have any questions or need help.
(916) 337-0658 e-mail: Mike@BMikeWest.com