Losing the family home is perhaps one of the most devastating experiences that any family or individual can endure. After all, Home Ownership is a cornerstone of the American way of life, it is promoted, encouraged, protected and cherished. People who have lost their home, say that a foreclosure is demeaning, degrading and even embarrassing. But how do you avoid a foreclosure?
There are a few steps that you could take to avoid losing the home. If it looks like you are headed into foreclosure, you must spring into action and make foreclosure prevention your main goal. Doing nothing is by far the worse plan of all. The following list should help guide you through this experience.
1. Take Action and Be Proactive. When the first sign of trouble appears, be proactive and do not allow stress to bring you down. The earlier you start, the easier will be for the creditors to work out a plan for you, late fees will count heavier as times passes and when more of them are accumulated, your debts keep increasing. There are millions of Americans in this same situation, there is nothing to be ashamed of.
2. Contact Your Lender. The moment you see yourself getting short of funds and unable to pay the mortgage, call your lender and be forthright with them about your problems and the cause of it. Lenders lose a lot of money foreclosing on a property, they do not want the house, they want to work out things with you. There are now government incentives for banks to help home owners in foreclosure. Find out what your lender offers.
3. Read All Your Mail. Everything the lender sends to you, requires attention and sometimes an answer. You will be getting other mail from different sources who want to "Help you," don't fall for that. The communications between you and your lender should be ongoing until the last day. If you have more than one mortgage, you will need to keep in touch with each one of them. Important legal notices and procedures will be mailed to you, don't ignore your mail box.
4. Find Out if You Can Help Yourself. Make an inventory of what you have, and see if there are possibilities of coming up with cash to help structure a refinance loan to avoid foreclosure and keep the house. Do you have a collection of antique stamps for example that you could sell? Maybe sell the expensive car or boat to raise cash, maybe a life insurance policy that you could cash out. Retirement funds could be used too. Could a relative loan you money, you will never know, unless you ask. Don't be shy here.
5. Find out the Time Lines of a Foreclosure. If you know where you are, and where you are headed, chances are you will get there ... or not, depending on what you want to accomplish. The time elements of a foreclousre procedure vary from state to state. Typically, you will get a Notice of Default (NOD) 90 days after missing the first payment. In another 90 days you will get a Notice of Trustee Sale, (NTS.) According to the Mortgage Bankers Association, the average time between the first missed payment and the foreclosure sale is approximately one year.
6. Contact a HUD and a Realtor. The HUD approved housing counseling Agency. (800) 569-4287 or www.hud.gov Can provide you with information about goverment approved plans, if applicable. Also, a Professional Realtor can be an invaluable ally, with proper authorization, he/she will deal with the bank, and help you throughout the entire process. Realtors have been learning how to work with banks and how to put together a short sale package, if you decide to sell the house via a short sale. Not all Realtors are created equal; work with the Professional that can prove to you if he/she is experienced in short sales.
7. Seek Competent Legal Advise. You will need to know the legal, credit and tax consequences of selling a house via a short sale or a foreclosure, or even a Deed In Lieu of Foreclosure. You will need to know how your credit will be affected, and for how long. The type of loan and property you are relinquishing could determine possible tax consequences, your CPA could tell you if there are ramifications after the sale, some of them are called deficiency judgments, these can be nasty surprises if you do not know they are coming.
Because this process varies from from state to state, this list is rather generic. Become knowledgeable with the laws of your state. The implementation of these ideas, and the information presented here, in no way constitutes legal advise.
The focus of this post, is to provide those contemplating the difficult transition of a short sale or a foreclosure with information about the process. Particularly from the standpoint of the real estate practitioner. With perseverance, good clean paper work, good explanations and lots of luck, you could come out ot this situation ready to rebuilt faster than you think.
Antonio & Alexia Cardenas
"The Realtors In Motion"
CRS, GRI, E-Pro Certified. SFR (Short Sales, Forclosure Resource) Serving the east shores of the San Francisco Bay, Alameda county: specially the following cities: Castro Valley, San Leandro, San Lorenzo, Hayward, Oakland, Pleasanton & Dublin.
Visit us on line at:
www.listedbyantonio.com or call (510) 326-4263
Call us, We'll come and TANGO with you!