Foreclosure Facts, Types and Options

Stop Foreclosure NOW!
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Foreclosure serves the interest of no one and most of all you. The lender does not want your home due to the costs involved in foreclosure. You, on the other hand, depending on how much importance you place on your credit score and considering your age, you may or may not be willing to wait the length of time it may take to clean up the blight of foreclosure on your credit record to make another major purchase. However you perceive the importance of having credit , the fact is that if you do lose your home, and plan to rent another that foreclosure may present a stumbling block in doing so and provide a steep uphill climb to regain your credit.

If you are planning to buy another home, foreclosure does not prevent you from doing so, but it does have a direct impact on whether you recieve the best interest rates and can effect the size of your downpayment to the tune of thousands of dollars. However, the loss of a decent credit score is not a life long event and can be recouped over a period of time through timely payment of bills and living well within your means.

Another fact of Foreclosures is it's effect on the rental market for single family homes. With so many foreclosed homes being removed from the housing market, the rental market is becoming over saturated in many areas of the country with the number of foreclosed on families seeking single family homes for rent. as a result, there are long waiting lists for rental real estate and landlords are charging inflated rents resulting higher costs for rental housing. often surpassing the mortages that many homeowners were paying on their foreclosed home.

The woes inflicted on America by the subprime meltdown have only just begun. and all of the facts of it's effects on America are not presently being addressed by the media. Thousands of homes are being taken off the market as a result of foreclosure and will not reappear on the market until the foreclosure process is completed and they are sold, which may take up to a year. Thus, there are long waiting lists for residential rentals across the country due to demand for rental real estate outstripping the supply. Making the effort to save your home while interest rates are at an all time low , may prove to be far more beneficial and cheaper than facing the consequences of foreclosure and finding another place to call home.

The last thing you want
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There are two types of foreclosures: non-judicial and judicial. Each state's foreclosure procedures fall under one or both types of foreclosure. Knowing the type of foreclosure in your state may give you additional options, rights in handling procededings and gives you a time frame in which to accomplish your goal.

Non-judicial refers to foreclosures that are not required to go through a court of law. Each non judicial state has a different procedure. Normally. states that use mortgages. use judicial procedures and states that use deeds of trust use non judicial procedures, but there are a few states that use both. When a loan default occurs, the homeowner is mailed a letter of default, and a Notice of Default will be recorded at approximately the same time. If the homeowner does not cure the default, a Notice of Sale is mailed to the homeowner, posted in public places, recorded at the county recorder's office, and published in area legal publications. After the legally required time period has expired, a public auction is held, with the highest bidder becoming the owner of the property, subject to their receipt and recordation of the deed. Auctions of non-judicial foreclosures will generally require cash, or cash equivalent either at the sale, or very shortly thereafter. Non-judicial foreclosures usually move more quickly to conclusion than judicial foreclosure.
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A judicial foreclosure is processed through the courts, beginning with the lender filing a complaint and recording a notice of Lis Pendens(suit pending).stating the amount of the debt owed, and the reasons for the default and why the lender should be allowed to foreclose and take the property given as security for the loan. The homeowner is served with the notice of complaint through a direct service, mail or public notice and given the opportunity to respond to the complaint before the court. A judgement is issued for the total amount owed to the lender including costs of the foreclosure procedure, if the court finds the debt valid and in default, a writ is then issued authorizing a sheriff's sale of the property either in an auction that is open to the public and held in a public place, on the courthouse steps or in front of the property. Sale is to the highest bidder upon confirmation by the court and cash is paid at the time of sale or a substantial deposit is accepted with the balance being paid later on the same day or 30 days thereafter. Once the sale is confirmed by the court, the deed is recorded and the highest bidder becomes the owner of the property.

23 legal ways to prevent foreclosure

As with everything in life consequences follow the path we choose to take and so it is with some of the options available to prevent foreclosure. Choose an option that best suits your needs and benefits you financially in the long run. The one option not availlable is hesitation or proscrastination when facing foreclosure. You should always contact your lending institution, if you have or foresee a problem in paying your mortgage. Most lending institutitions have a fully staffed department, called loss mitigation that handles such problems.

There are several options available for consideration in the event of foreclosure

• 1. Bankruptcy - Bankruptcy laws vary from state to state and each state determines what property is exempt., Chapter 7 does not stop foreclosure, but it can place a temporary stay on foreclosure for a prescribed period of time. However. depending on the amount of equity you have in your home, whether you meet state means and income tests will determine whether you keep or lose your home to meet your debt obligations. However, it can provide a temporary stay against foreclosure. but if a lender files a motion to lift the stay and asks the court for permission to schedule the foreclosure sale, based on the discretion of the court, foreclosure can proceed at any time .
  
  A chapter 7 Bankruptcy remains on your credit record for up to 10 years. Chapter 13 allows you to work out an arrangement of payments on your mortgage that includes your back payments over a predetermined period of time , usually 5 years, with your lender. You and your lender are legally bound by the agreed upon terms - in essence a chapter 13 bankruptcy is simply reorganization of your debts.. It may be wiser to pursue other options, before filing bankruptcy.


• 2 .Homeowners with Fannie Mae mortgage who failed to qualify for the HAMP program may be considered for Fannie Mae's alternative home modification program... As of April 2010 Fannie Mae modified its program to service conventional loans. The progarm ends in December 2012.
  
  FHA also has programs to help homeowners in trouble. including those with underwater mortgages ( mortgages were the home's purchase price exceeds the current value of the home} . The program encourages both lenders.and borrowers to work together to restructure their mortgages. However, the program is on a voluntary basis for the lender and not all underwater borrowers, who meet the criteria will receive an FHA refinanced mortgage. If you are unaware of who owns your mortgage, your mortgage company can provide you with this informaion, or you can click here.
  
  
• 3. Principal reduction program - one of the main components of this program is earned principal forgiveness that addresses severely underwater mortgages ( a mortage that exceeds the current value of your home) with some of the highest rates of delinquency. Principal forgiveness specifically deals with subprime loans, Pay-Option ARMs and prime two-year hybrid ARMs that are 60 days or more delinquent with a principal balance of 120% or more.


• 4. Soldier and Sailors Civil Relief Act - enacted in 1918 and modified again 1940, and 2006 provides protection for all members of the military including the Natinal Guard, If a military member is called to active duty. The purpose of this act is to provide protections to servicemembers who have difficulty meeting their personal financial and legal obligations because of their military service. There are other benefits of this act for actve service members and some extend to family members, but for the purpose of this lens it provides a delay of all civil court actions, such as bankruptcy, foreclosure or divorce proceedings.


• 5. Loan modification - allows you and your lender to renegotiate and adjust the terms of your mortgage. This can be accomplished through reduction of your interest rate, changing an adjustable interest mortgage to a fixed mortgage. decreasing the amount owed on the principal balance of the loan, adding missed payments to the back of the loan and/or extending the life of the loan to make payments affordable for the borrower. This is one of the best options for a homeowner and can result in little or no effect on your credit score . It is an option that can be initiated by the homeowner without third party assistance. Banks have become more willing to work with homeowners in loan modification than in the past, due to the recent monetary incentives offered by the federal government to help homeowners who are in foreclosure or foresee financial difficulties in the immediate future.


• 6. A short sale- entails permission from the lender to sell your house for an amount less than you owe on the original loan. A short sale may not be as beneficial as many may have you believe. if you live in a state that allows lenders to sue for a deficiency . If you decide to pursue this route, you will need your lender to agree (in writing) to forgive the difference.. However a short sale may lead to additional taxes by the IRS and possible state taxes on the deficiency amount created by selling your home for less the original purchase price. Both state and IRS consider the deficiency in the sale of your home as forgiveness of debt by the lender and view it as income and may tax you on the deficiency amount. Before pursueing this options, consider the sluggishness of home sales , which may reduce your chances of getting a buyer to slim or none.


• 7. Deed in lieu of foreclosure - you give your home to the lender in exchange for canceling the loan. The lender promises not to initiate foreclosure proceedings, and to terminate any existing foreclosure proceedings. However this can be a bad choice depending on the state where the property is located - the amount of forgiveness of debt may be taxable. Lenders stiil consider this as a foreclosure and it will effect your credit score. in addition, if your property is located in a state that allows the lender to sue for deficiency , you have opened the process for the lender to not only go back to court to sue for a deficiency judgement if the house is sold for less than it's purchase price but to sue for additional fees and cost accrued or expected to accrue such as interests, advances,real estate commissions etc., until the house is or was sold. . If the bank sells your home for less than the loan amount, the IRS may consider this as a forgiveness of debt by the bank and income to you,, which may be taxable. Most lenders will not consider a Deed in Lieu of foreclosure unless you have exhausted every option available to you. This is an option that should be considered only as the last resort.


• .8. Forbearance - is a temporary agreement under which a mortgage lender can either reduce or suspend monthly installments by the borrower. Usually forbearance continues for a period of less than 6 months, but it can last up to a year depending upon the lender. This allows the borrower the chance to avoid foreclosure. However, forbearance is not for every borrower. and lenders may only consider it if the borrower can convince them that the problem is only temporary.and the borrower can produce relevant proof showing he is capable of qualifying for the reduced payment plan. Once the lender alotted period has passed, the borrowere resumes regular payments along with an additional amount that will makeup the amount of reduced payments or loss on the amount not paid during the temporary agreement. This may or may not be a good option depending on your financial status.



• 9. A quit claim deed - transfers your interests in real estate to another. It does not remove your responsility to repay an existing loan on your property. Although it has its uses in cases of divorce, unpaid bills for medical reasons and giving your home to a relative, it is not viewed favorably by the courts if executed while in the process of foreclosure. Eventhough it may be viewed as beneficial under certain circumstances, In the case of foreclosure. you may open the avenue of eviction from your home before you are ready to move.


• 10. Last but not the least of your options, and the most important: MAKE THEM PRODUCE THE NOTE Mortgages within the last 10 years,. have been securitized ( bundled with other mortgages and sold as securities), there is a very high probability that the original promissory note transfered. However, forcing a bank to produce the original promissory note may not work in some non-judcial states. and other steps may need to taken in addition to making a bank show ownership of the promissory note, especially in non-judicial proceedings. It is important to note that in non-judicial states you will have to initiate a lawsuit to force the party initiating the foreclosure to show whether they have the authority to foreclose. by producing the note as opposed to a juducial foreclosure, where the bank initiates the lawsuit and you file a motion to compel discovery of who holds the original promissory note. Although it is possible for you to do this yourself, the process can become complex, depending on the law in different states..It is always wise to consult a lawyer first to determine your options before initiating a lawsuit. See related video below for details.

Nobody Knows Your Situation Better Than You

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