Foreclosure Tips:
Good Foreclosure Resources!
Home Ownership Preservation Foundation - www.995hope.org
HUD - www.hud.gov/foreclosure
Federal Reserve - www.federalreserve.gov/pubs/foreclosure
Neighborworks America - www.nw.org/network/foreclosure
Foreclosure Tips and Information
#1 - Get a Loan Modification
A loan modification is a great option and it seems that a lot of lenders out there are willing to work with home owners on renegotiating the terms of their current loan. I didn't say every lender is willing, but it is definitely worth the effort to see if your lender is willing to work with you. They will require pay stubs and tax information, and if you are self employed you will need to provide a P&L statement for the past 3-6 months. Sometimes the lender will wrap the defaulted amount you owe onto the back of the loan, restructure the interest rate, and get your payments lower. Most banks want to work with you to keep you in your home rather than getting your home back in foreclosure and taking a huge loss. This process can be long (4-6 weeks) and frustrating. Don't be surprised if they are more willing to work with you the closer you get to foreclosure, rather than coming to them before you start missing payments.
#2 - Sell Your Home
Selling your home is the next best option. If you are not upside down on the value of your home and can't afford the mortgage payment this is something to think about. Generally this needs to take place before you go late on your mortgage payments. Get with a local real estate professional that knows your market (Harriet Jorn) and understands the best way to price your home. Be realistic when setting a value because prices are not what they were two to three years ago. Expect to realize that your home has probably lost 50% of it's value over the last year with the downturn of the market. Even if you break even, it's better than having a foreclosure on your credit.
#3 - Negotiate a Short Sale with Your Lender / Bank
A Short Sale occurs when you are upside down (you owe more than the home is worth) on your mortgage. What happens is you sell your home for less than what you owe on the home as long as the bank allows you to do it. This can be a long drawn out process and the bank may not be willing to take the loss. Each bank is different, so my advice is to contact your lender and see they are willing to work with you.
#4 - The Foreclosure Time Line
Once a mortgage payment is missed, it is reported to the credit bureaus. Expect that after 90 days of missing payments that the Notice of Default will be filed at the local court house. You will more than likely receive a letter stating that the foreclosure process has begun. Expect to have your house go up for auction anywhere from 2-3 months passed the initial 90 day mark. It could take longer with the amount of foreclosed homes on the market. Banks are backlogged and the process is taking longer.
#5 - Cash For Keys
Once your home is foreclosed upon and sold at auction you will be contacted by the new owner of the property. The standard operating procedure of contact is a 3 day notice of eviction. As a home owner in the foreclosure process, know your rights. Communicate with the new owner of the house to determine a date to vacate the property. Usually if you communicate with them they are willing to work with you. If you don't communicate with them, be prepared to deal with local authorities and the eviction process. Sometimes the new owner will offer "cash for keys", which means the faster you move out, the more money they are willing to compensate you with to speed the process along.
If you are a renting a foreclosed upon property, you have different rights. The new owner may approach you about signing a new rental contract. My advice is to contact an attorney that is familiar with renters rights and foreclosures to make sure the new owner is abiding by current state and local laws with regard to evictions.
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