9 Ways To Stop Foreclosure. Don t Let Time RUN OUT!

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1 9 Ways To Stop Foreclosure Don t Let Time RUN OUT! Q.B. Homes - Great Success Realty. Saar (Sam) Elazar, Licensed Real Estate Salesperson CDPE Certified Distress Property Expert Queens Blvd. (Ground Floor) Jamaica, NY Office (347) Mobile (347) Fax (718) w w w. q b h o m e s. c o m

2 9 Ways To Stop Foreclosure 1. REINSTATEMENT: Bring the loan current You have to pay all the debt and miss payments on your mortgage immediately. The first reason a home owner is in foreclosure is since he could not make the payments to begin with, now making several payments at once with late charges, interest and possible other charges is unrealistic. 2. FOREBEARANCE: Temporary repayment plan The lender delays his right to exercise foreclosure if the borrower can catch up to his payment schedule in a certain time. When a lender offers forbearance, they are taking control of the situation so that they can maneuver whichever way best serves the lender. The borrower is still responsible for the total monthly payment due each month. When the forbearance period is over (or before) if the home owner have not successfully made all the payments (ON TIME) the bank can immediately foreclose on the property. 3. REFINANCE: New loan with reduction in monthly payments The home owner will take a new mortgage from a different bank with a reduced monthly payment due to equity in the property (if any exist) and a lower mortgage rate (if available at the time). There are few basic problems with this plan: A. In most cases the reason the homeowner is in default is shortage of income and with that, no one can get or afford a new mortgage. B. The amount of the mortgage does not change! Only the interest rate does, because of that the reduction in the monthly payment in most cases is not sufficient for the homeowner to be able to pay the new payment. C. The home owner is in foreclosure, no bank in his right mind will approved any person in foreclosure for a new loan. Page 2 of 8

3 4. LOAN MODIFICATION: Modify original loan terms The bank will agree to modify the mortgage payment in accordance to strict guidelines to make the payment of no more than the homeowner s 38% of the gross income even if it means to stretch the loan to up to 40 years (endless amount of interest) and that all other criteria are in affect. In most cases, most home owners do not match the criteria to qualify, by shortage of: A. Income (main reason most people go to foreclosure) B. May have more than one property owned C. Property is abandoned, vacant, condemned, or in a serious state of disrepair. D. None cooperating tenants (Happen more often than though). E. Must have a conventional or jumbo conforming mortgage loans originated on or before January 1, 2008/9 F. Borrowers who are at least three or more payments past due and are not currently in bankruptcy G. Only one-unit, owner-occupied, primary residences; and H. Current mark-to-market loan-to-value ratio of 90 percent or more I. Some Others 5. SELL THE PROPERTY: Use equity to pay off or pay difference The home owner sell the property and pay off the delinquent mortgage with the proceeds at the closing time. With current market situation a huge part of the properties purchased in the past 5-10 years have no equity due to interest only mortgages that where common at that time and market value of homes soured down and now the current mortgage balance is higher then the value of the property, also know as upside down or under water and the only ways to sell it, is if the seller come with a checkbook to the closing to cover the balance (if he is in foreclosure and cannot cover a monthly payment how can he cover 20%-50% of the original value) or sell the property through a Short Sale Process where the bank agree to take a loss. Page 3 of 8

4 6. RENT THE PROPERTY: Rent the property and pay mortgage with the rental income. The home owner will rent the property to any tenant/s and pay the mortgage payment with rental income. As it may sound as a perfect plan, it has some problems: A. Must make loan current on the mortgage otherwise the bank will foreclose anyway. B. The rental income in many cases DOES NOT cover the mortgage payment in full. C. If you rent your home to tenants, where will you live? Most cases rent a place yourself, can you afford to rent and pay the mortgage at the same time? MOST LIKEY NOT! D. Even if all the above will work, 1. Renting may take time so you will have a vacant property you need to make payment you can t afford to begin with 2. Tenants are not always perfect, and may not pay in time or at all, you may find yourself late on the mortgage again and fighting for eviction with more expenses at the same time. 7. DEED IN LIEU OF FORECLOSURE: friendly foreclosure The home owner gives the DEED to the lender (transfer the ownership) in return to stop the foreclosure and usually an agreement to stay for a certain time or rent the property. This action is a finale solution that will take effect immediately; the home owner will no longer be the owner of the property and will have no control of what is going to happen, Banks DO NOT hold properties! They will sale it as soon as possible and even if they let you stay, the new owner most likely will want you out and fast. As well you get no compensation at all and once you step out of the property you lose all you spent into it. Page 4 of 8

5 8. BANKRUPTCY: Will stall foreclosure but not prevent it The home owner declares a bankruptcy to avoid debt collection of all sorts and get the protection of the law. Bankruptcy is the LAST STAND there is no coming back from it, many may tell you that it is a perfect solution to quickly end all your troubles yet this is where many BIG ones start! A. A BANKRUPTCY WILL ONLY STALL FORECLOSURE BUT NOT PREVENT IT AT ALL! B. When bankruptcy is done you will not be able to make any of the other options set above and below, the bank see this as an act of war a way to deceive and avoid negotiating a solution purposely and deliberately, they will foreclose on the property as soon as they can (usually within months). C. A bankruptcy will harm you credit for minimum of 7 years that you will not be able to purchase a new home, a car, get other loans, credit cards etc. D. The minimum 7 years will get worse, since the bank will foreclose on the property you will have a bankruptcy and a foreclosure on you credit at the same time for possibly 5-10 years, imagine how hard it will be to buy groceries at that point. E. A bankruptcy can cost you your JOB!!! If you work for any financial institution or who do some financial related business, the next time your employer will check your credit (usually once a year) you will lose either your job or position. F. Security clearance, same as above, a bankruptcy and or a foreclosure will hurt your security clearance and you may lose your job, position; if you work for a bank, accounting company, police, military, any financial company, brokerage firm or any other that ask for a credit check you may lose your job as soon as they find out (and they will) G. For the same as E. & F. it may prevent you from obtaining a new job. BANKRUPTCY IS NOT THE SOLUTION, UNLESS YOU CHECKED AND TRIED ALL OTHER OPTION INCLUDING THE NEXT ONE ON SEC 9. DON T EVEN THINK ABOUT GOING THIS WAY. Page 5 of 8

6 9. SHORT SALE: Negotiate with bank to accept a sale under the loan amount The home owner negotiates with the bank (WITH AN EXPERT PROFESSIONAL ONLY!!) to agree that the homeowner will sell the property to a 3 rd party in any amount that is less than the mortgage balance and agree to lose the difference. Why in most cases this is the only solution? A. Most people are in default on their mortgage due to some hardship, even if the hardship is other than direct financial hardship e.g. divorce, illness, death in the family, medical issues and others they all usually have a direct path to financial hardship or major changes in the ability to afford the home and or other vital need, it is a must in order to approve a short sale. So while it s an obstacle for all other solutions it is a corner stone for a Short Sale. B. Credit Score in a Short Sale only late payments on mortgage will show, and after the sale, mortgage is normally reported as paid as agreed, paid as negotiated, or settled. This can lower the score as little as 50 points if all other payments are being made. A short sale s effect can be as brief as 12 to 18 months. C. Credit History - A short sale is not reported on a person s credit history. There is no specific reporting item for short sale. In most cases a loan is typically reported paid in full, settled or paid as negotiated. D. Security Clearance, Current Employment and Future Employment - Short sales are currently not explicitly reported on a credit report. E. Deficiency - In most successful short sales it is possible to convince the lender to give up the right to pursuit a deficiency judgment against the homeowner. F. Appearance a Short Sale as it Self locks just like any other regular sale of a property, no one will really know the homeowner is in foreclosure and will save any embracement. G. Purchasing a New Home since a short sale is not reported on a person s credit history, and other reasons a homeowner will be able to purchase a new home within his affordability in as little as 2 years and some cases immediately. Page 6 of 8

7 Did you know? For Most People the Best Way to Stop a Foreclosure is though SHORT SALE! No one wants the stigma attached to having a home repossessed by the lender through foreclosure, or the black mark left on one s credit history for every creditor to see in black and white. And it can stay there for as long as 10 years no less (Usually More!). Although essentially similar in process, for a homeowner to stop foreclosure in New York the state laws may be slightly different for another city. Many homeowners who bought around the top of the market, back in 2004 through 2006, are now stuck with having purchased more home than they could afford. Through the ease of obtaining exotic adjustable rate mortgages during those years, homeowners found themselves over-encumbered with debt, having financed as much as 110 percent of the sales price of their home. As a result, they are now finding themselves with a monthly payment that is unaffordable as interest rates adjust to higher rates, thus bringing the new payment to as much as 25 to 50 percent higher than the initial payments they made. Now they are left looking for a way out of a dire financial situation without the stigma left over. For distressed homeowners one possible option is the short sale. Selling a home via a short sale is a legitimate method for stopping the foreclosure process, allowing the homeowner to get on with life and without the ding to the credit record. What s the catch? By definition a short sale is literally the sale of a home for less money than is currently owed the lender on the outstanding mortgage being foreclosed on. In other words the home is upside down from a financial aspect. Therefore, the catch is that in order to successfully conduct a short sale, the foreclosing lender has to agree to it, essentially agreeing to accept less money than it is owed on the loan secured by the house (This Is Where We Come In As Certified Distressed Property Expert, And Hundreds Of Successful Short Sales, We Know How To Negotiate With Any Lender To Approve A Short Sale And To Find The Right Buyer For It At The Same Time). A short sale is not a vehicle normally seen during a seller s market when multiple offers are lining up at the door competing with each other for the house. Short sales are most widely accepted during a buyer s market when home sales are dragging, home values are declining, and inventories of available properties are growing to the point that the lender basically is just throwing up its hands and saying some money for the house is better than no money at all. Lenders are not in the business of owning real estate. They get upset when they have too many properties on their REO (real estate-owned) books instead of out in the market making it a profit through monthly mortgage payments. Plus, the foreclosure process is not free. Every house they foreclose on costs them thousands of dollars. So, in some instances, agreeing to a short sale is in the lender s best interest. And it is up to the homeowner to convince the lender that this is one of those circumstances where it s better to fish and cut bait. It s a matter of numbers and economics. The homeowner needs to demonstrate to the lender hard numbers that will lead the lender to conclude that selling via a short sale is going to benefit them more than the amount they would garner from foreclosing on the property and then selling it as an REO. Page 7 of 8

8 WH AT IS THE FIRST STEP? So for homeowners looking to stop foreclosure, the first step should be to contact us as soon as possible, so we can contact the lender right away to STOP THE CLOCK and negotiate a Short Sale. it is advisable to seek the assistance of a real estate professional who is well versed in short sales. Not all real estate brokers or sales agents know how to conduct a short sale or how to work with lenders in negotiating one. Don t be afraid to ask a real estate professional if he or she has any experience working short sales. If not, move on and interview until you find one who has. Possessing a real estate license does not make them an automatic expert in short sales. It calls for extra training not all real estate professionals have. If anyone ask you to pay them any amount to negotiate with the bank, know that something is wrong, either they are not legit or they do not know how to do the work properly and live of fees charged from the home owners instead of charging the bank and only if the Short Sale is completed successfully. WE GUARANTEE TO STOP FORECLOSURE PROCESS. WE GUARANTEE TO STOP THE LENDERS FROM CALLING YOU. WE WILL HELP YOU SAVE YOUR CREDIT AND YOUR REPUTATION AS WELL. OUR SERVICE IS 100% FREE! - YOU WILL PAY US NOTHING! YOU WILL NO LONGER HAVE TO PAY ANYTHING OR ANY FEES EVER, G U AR A N T E E D! DID YOU KNO W? MANY LENDERS OFFER GREAT INCENTIVES AND YOU MAY BE ELIGIBLE FOR UP TO $30,000 SHORT SALE INCENTIVES FROM THE BANK FOR RELOCATION AND OTHER EXPENSES! 2012 Q.B. Homes LLC C/O Great Success Realty All Rights Reserved. The above brokerage assumes no responsibility nor guarantees the accuracy of this information and is not engaged in the practice of law nor gives legal advice. It is strongly recommended that you seek appropriate professional counsel regarding your rights as a homeowner. As we offer you a free service we will be paid by the lender at the time of closing in your behalf any such payment will show on the HUD-1 Form. IMPORTANT GOVERNMENT DISCLOSURE: You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender (or servicer). If you reject the offer, you will not have to pay us for our services. The above brokerage is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. Page 8 of 8