Huntington Beach, CA:
Put Those Foreclosure Fears To Rest.
Discover What Your Bank Does Not Want You To Know.
Quickly Determine Which Option Is Right For You.
Foreclosure can be a very frightening and humiliating experience. In many cases, it’s not even your fault!
Whether we live alone or are the provider for loved ones, it is one of the most devastating financial challenges a family can face. But here’s the good news:
1. You’re Not Alone !
2. Foreclosure Can Be Easily Avoided!
One Thing The Bank Does Not Want You To Know…
Before I share the ‘9 Alternatives To Foreclosure’ with you, I want to let you in on a dirty little secret:
“The Banks Do Not Want Your House!”
Although it may seem that way at times, it’s simply just not true!
I need you to remember that.
Banks are in the lending business, not the real estate investment business. They MAKE money when they loan out money. The borrowers then ‘perform’ on those loans or pay the money back with interest.
They LOSE money when they have to hire attorneys to help take your property through foreclosure to get the title back, to then be able to force the sale, to then lose more money trying to re-market the property and get it ready for sale, to then pay commissions to list and sell the house. Again…all so they can get their money back…so they can go lend it out again at a profit!
They do NOT like ‘non-performing’ loans on their books. These lenders have a lot to gain by working things out with you.
As you review the ‘9 Alternatives To Foreclosure’ below, it is very important to look at your personal situation from a logical or financial standpoint. That is how the bank looks at it. They ask themselves, “How can we minimize our losses?” You should do the same. I can promise you that they are looking out for their best interests…not yours!
You must also be proactive and ask yourself the same question, “How can I minimize my own losses?” If at any point in this analysis process you’d like my assistance, I’d be happy to provide it.
“Doing Nothing?” Yes…This Is An Option…But NOT An Alternative That Will STOP Foreclosure! It is not an option we want to focus on here.
When you apply for any type of loan in the future, most applications generally ask if the applicant has ever lost a home to foreclosure. Credit reports also disclose this damaging information and can result in higher interest rates on car loans, credit cards and other financing. Many potential employers are now asking this question, too! The long term cost of doing nothing is staggering! This is NOT the best option!
With all that said, whether you:
• currently owe more to the bank than your house is currently worth,
• have been forced to relocate or have transferred out of state for your employment and your house isn’t selling,
• have recently lost your job and don’t have income to make your mortgage payment,
• have experienced a bump in your monthly payment as your mortgage rate adjusted upward and can no longer afford the payment,
• have recently gone through a divorce and neither party wants the house…which again, might be upside down,
• recently declared bankruptcy, or
• recently experienced a business failure,
You still have the original agreement with the bank to pay them back what they loaned you…plus interest. If you don’t, they ultimately have the right to ‘throw you out on the street.’
Of course they’ve got to foreclose first to get ownership to the property back. But after that, they can force the sale at a public foreclosure auction.
Here’s where the emotion comes in! This is where people become frightened. The thought of being thrown out on the street is not a pleasant one.
The thought of your neighbors knowing everything that is going on and your house selling at a public auction is humiliating. Unfortunately, the whole foreclosure process is confusing and too many homeowners end up in denial and do nothing. Or once they do get educated on the process, their indecisiveness stops them from taking any type of action.
It’s the classic ‘paralysis of analysis’ that we hear so much about. They somehow think something magical is going to happen to solve their problem. Whether you take any action or not, the clock is still ticking…
Remember: Time is of the essence!
You’ve got to get answers…and quickly! You’ve got to understand the foreclosure process. Getting help early in the process is much better than waiting until it’s too late, when there’s not a lot of help anyone can offer.
I commend you for being proactive and taking a logical approach and requesting this report, even though situations like these can be very emotionally draining. After reviewing the ‘9 Alternatives To Foreclosure’ you’ll be well on your way to successfully determining which option might best suit your needs.
There are certain qualifications’ for each alternative. As you narrow down the options that best suit your needs, you’ll want to be sure you determine whether or not you qualify for those options as quickly as possible.
That’s where I can be a tremendous help. On a daily basis, I hear the same two questions:
Is there a way I can stay in my house?
What are all my options to help me avoid foreclosure?
My answer is always, “Let’s see what you qualify for!” I wrote this report to help you quickly get educated on what you qualify for and put your foreclosure fears to rest.
The first four options you’ll read below will allow you to stay in your home, and the last five options involve you relocating. So let’s go through them now…
The 9 Alternatives to Foreclosure
1. Reinstatement – This is by far the easiest, simplest and quickest solution to stop a foreclosure. You request the total amount ‘in arrears’ or the amount you are behind in payments from your bank. After some strategic analysis, you then decide whether to take money from savings or borrow from a family member, friend, or private investor to bring the payments current that are behind. This option exists all the way up to the day before the final foreclosure sale, so you need to be aware of any pending foreclosure deadlines.
This decision is an important one. You’ll want to have your property valued as soon as possible to see if this option is a fit for you. You may be in an ‘upside down’ situation.
a. Benefit: You do not need a mortgage company or lender’s approval. You do not need to ‘qualify’ for this option.
b. Drawback: This can quickly deplete hard-earned savings requiring the homeowner to be able to pay all back payments, fines and late fees. If you are upside down, you will have a hard time convincing a family member, and for sure a private investor to loan you the money to reinstate.
2. Refinance – In a situation where you have sufficient equity in the property, and your credit is still in good standing, you may be able to refinance your mortgage.
• Benefit: In some cases, when mortgage rates are lower, the new monthly mortgage payments are lower. There are a few government programs that will still allow you to refinance if you have only missed one payment in the last 12 months.
• Drawback: In most cases, due to a heavy debt load and lower credit scores, a refinance will almost always raise mortgage payments, if you can even qualify in the first place. Gone are the days of being able to ‘state’ your income. You must prove everything to the bank in the qualification process. The overall process is very expensive as well.
3. Loan Modification – By dealing with your existing mortgage company, you can attempt to ‘refinance’ the debt by getting the lender to agree to either extend the terms of the loan, lower the interest rate, and in rare cases, even lower the principal balance. This allows the homeowner to stay current on the loan by providing a steady and more affordable payment.
To qualify, you must prove to the lender that you can afford at least the ‘reduced’ payment and that you have at least partially fixed the problem(s) that caused you to be late on your payments in the first place. The first thing is to find out who owns your loan and if they are even actively pursuing loan modifications. They might not be.
• Benefit: Your monthly payments can be reduced, and sometimes even the principal balance of the loan is also reduced.
• Drawback: Qualification is required for the new payment and often requires ‘full documentation.’ Your lender also has to be actively pursuing modifications.
4. Forbearance or Repayment Plan – If this option exists in your state, many lenders will arrange a repayment plan, based on your financial situation, if the situation that caused you to miss payments was temporary and has been fixed. The lender may even be able to provide a temporary payment reduction or suspension of payments for a few months.
At the end of this forbearance plan, it is normal that your payments will go up for a few months to spread out the missed or suspended payments over several months. Financial information will be required from the lender to show that you are able to meet the new payment plan requirements.
• Benefit: You can make up back payments you missed over time.
• Drawback: Qualification is required to show that you are in a financial position to pay not only the current mortgage payment, but also the portion of the back payments owed.
5. Rent the Property – If by chance you have a mortgage payment, including taxes and insurance, that is low enough where market rents will cover it, you could convert your property to a rental and use the rental income to pay the mortgage.
• Benefit: You will be able to keep the property indefinitely.
• Drawback: Without the experience of being a landlord, the many issues that can arise with a rental property can bury you financially. Once the cost of an experienced property manager is figured in to the total cost of property ownership and maintenance, the numbers often no longer make sense.
6. Deed in Lieu of Foreclosure – In a ‘deed in lieu’ situation, you basically give the property back to the bank instead of forcing the bank to foreclose. It’s known as a ‘friendly foreclosure.‘ You need approval from your lender for this option, and you will have to vacate the property.
• Benefit: In a successful ‘Deed in Lieu,’ your lender will often forego it’s right to a deficiency judgement against you, releasing you from any future tax liability.
• Drawback: You will be required to look for a new place to live and vacate the property. This essentially is the same on your credit as a foreclosure. Most loan applications ask if this has ever happened and this will affect your credit for several years.
7. Bankruptcy – If you have non-mortgage debts that make it difficult to make your mortgage payments and a personal bankruptcy will eliminate these debts, this may be a viable solution.
Here’s the catch: due to the long-term impact, bankruptcy has to be considered the WORST case scenario and should only be considered when no other options are left.
Yes, this option can liquidate debt and/or allow more time to negotiate settlements with your creditors, but it does NOT stop the foreclosure process. Since Oct 2005, bankruptcy laws have changed in favor of the creditor and are now less beneficial for the consumer.
Here are current types of bankruptcies
1. Chapter 7 (Liquidation) To completely settle personal debt,
2. Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years, and
3. Chapter 11 (Business Reorganization) A business debt solution.
• Benefit: You do not need approval from your lender.
• Drawback: A bankruptcy only stalls the foreclosure process. It does NOT stop it. It is a very costly process and is very damaging to your credit score as it stays on your credit report for 10 years.
You also have to answer “YES” every time you fill out a loan application when your asked if you’ve ever declared bankruptcy. The cost of borrowing money over the long term, if you are even approved due to the bankruptcy, must be considered up front before ever filing bankruptcy.
8. Sell the Property – If your property has equity (money left over after all loans and other liens against the property are paid off), you can sell your home without lender approval through a conventional real estate sale. In this case, you will walk away with cash from the sale.
You will want to list your property with a qualified Real Estate Professional who has a strong understanding of the foreclosure process in your local area.
• Benefit: You will avoid foreclosure and, if there is equity in the property, you could walk away from the sale with cash.
• Drawback: In many cases in today’s market, homeowners do not have enough equity to make this option work. Many are in that ‘upside down’ situation we hear so much about.
Negotiations with the bank to accept a discounted loan payoff or ‘short sale’ will be required (see next alternative). Also, you will ultimately have to vacate the property and relocate your family to another home.
9. Short Sale – When you owe more to the bank on your mortgage than the home is currently worth, a negotiation with your lender to get a discounted loan pay off approved, is required to be able to sell your house. You’ll need to hire a qualified Real Estate Professional who specializes in these types of transactions and situations as there are several moving parts.
There are many things that will be required by your lender. You are typically required to list your property on the market and must have a financial hardship to qualify. A ‘hardship’ can be defined as a material change in the financial stability of the homeowner between the date of the home purchase and the date of the short sale negotiation with
Here are some examples (and there are many more) of acceptable hardships:
1. Mortgage payment increase,
2. Job loss,
4. Excessive debt,
5. Forced or unplanned relocation.
• Benefit: The bank pays all fees associated with a short sale to the appropriate parties. There are no up-front or out of pocket fees to you, the homeowner. With the right person helping you, all the work and strategic negotiation is done for you. You are able to stay in your home while the short sale is being negotiated.
You can also salvage some of your credit rating as a short sale allows you to avoid foreclosure. A short sale also keeps a foreclosure off of your public record and you often avoid a deficiency judgment from the bank releasing you of any future tax liability.
You can then qualify for another home mortgage in as little as 24 months as opposed to 5 years for a foreclosure.
• Drawback: Working with your lender is a very trying and aggravating process when you don’t know what questions to ask to protect yourself and defend your rights. You ultimately need to relocate to a new property.
You are best served by working with a qualified Real Estate Professional to guide you along the way, help protect you and help you defend your rights.
There you have it! The ‘9 Alternatives To Foreclosure!’ I hope you found this information helpful. In order to make the right decision and take the appropriate course of action…awareness is always key!
You’ve now got some homework to do…and fast! All of which we’d love to help you with. The homeowners I talk to everyday are so relieved once they determine which option is right from them and have a clear course of action. They experience that ‘sigh of relief’ moment which represents a major emotional and financial turning point in their lives.
Here are a few things I recommend doing right now so that you can being to feel much better:
1. You need to know what your property is currently worth. I can get this number for you very quickly. There are other sources like Zillow.com, but I’ve seen they can be off anywhere from $30k – $100k from recent closings. Give me a call.
2. You need help to determine your lender’s ‘Qualification Process’ to be able to determine which option is the best for you. We work with all the different lenders and know their qualifying criteria.
Your lender is looking to see if you meet a few certain criteria:
a. Financial Hardship – First and foremost a lender will want to see that you have a ‘financial hardship.’ Again, a financial hardship is a verifiable issue that has or will cause you to miss payments, or have financial difficulties.
Almost every lender will want to see that you cannot afford to pay your current mortgage, or will have difficulty paying it sometime in the near future . The way that this is demonstrated is on a financial worksheet that I can provide, along with a letter of explanation regarding our current or impending hardship. This is financial form is essentially a monthly profit and loss statement.
While this may sound difficult, in reality determining whether you have monthly shortfall or not is actually relatively easy.
b. Monthly Shortfall – Some of the items taken into account are:
• Mortgage Payment Adjustment
• Job Loss or income reduction
• Too Much Debt
• A Business Failure
The Shortfall equation is:
Total Monthly Income – Total Monthly Expense = Monthly Shortfall
3. You need to know who owns your loan and what government sponsored programs they are currently offering, if any, to see if they can help provide you with some much needed debt relief.
You’ll want to set up a time to meet with me, so I can help you review your financials. From there we’ll quickly determine your financial hardship and monthly shortfall.
We’ll then review your current property valuation and find out who owns your loan. With this information, you will be able to decide on the best alternative for you and your loved ones.
After you decide which option you feel is best, I will also advise you to consult with an Attorney and CPA regarding taxes and liability that might be associated with your specific decision, including questions to ask to them.
I look forward to meeting with you soon.
Please Note : If you’ve recently been denied a loan modification or a Notice of Default or Notice of Trustee Sale has been recorded against your property, call me right away.
I’ll help you get the pending sale date postponed so you have enough time to make the correct decisions.
My direct number is (714) 334-7808 You can also e-mail me at Tony@HunthausenGroup.com