6 Options When You can’t make Your Mortgage Payment

choices

If no longer being able to make your mortgage payment is a reality for you, here are 6 of the most commonly practiced and accepted options for any homeowner in this position.

  1. Loan or Mortgage Modification. This is a good place to start when you feel the mortgage payment growing to a place you can no longer handle it. Whatever you do at this point, DON’T WAIT!! As soon as you know your mortgage is too much for you, contact your lender. Rest assured, the lender does not want your house. They are in the lending business, not the real estate business. They will work with you even when you are still current on your payments.With a loan mod, they may refinance the debt, extend the term of your loan or even reduce your monthly payments to an affordable level.Your loan could be permanently changed by adding what you’re not paying currently to the back end of the existing loan balance, lowering the interest rate, making an adjustable rate fixed, or extending the number of years you have to repay your loan.

    Why would the lender want to do this? It keeps them from losing the loan payments and gaining a house and, ultimately, they will make more from you over time because it will take you longer to pay off the loan.

    Why would you want to do this? This allows you to keep the house and keep your credit in tact. It gives you time to wait until the market turns around, house values begin to climb and you can sell for a profit.

  2. Forbearance - Read more…

Flipping Properties

flip house

What makes a property a “flip”?  According to RealtyTrac, a property that is bought and then sold again within 180 days is considered a “flip”.

Apparently, we’re doing our share of flipping here in North Carolina.  RealtyTrac put out a list of the top 10 areas in the country for flips and Guilford County, North Carolina (my home) ranked number 5 on their list.  I’m happy to report that we and our coaching students helped significantly with that ranking!

RealtyTrac also reports that, in 2010, 15.6% of the foreclosed properties purchased in Guilford County resold within 6 months.  No wonder house prices have dropped so dramatically and buyers want to purchase, even retail properties, at such unbelievable discounts.

Are you a “flipper”?

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Foreclosure Attorney Fights Back

Faulty Foreclosures

CitiMortgage foreclosing on a property it doesn’t “own”? The saga continues.

Evicted Family Reclaims Home!

Well, all the foreclosure halts will bring their own problems. The banks have admitted to “doing it wrong”, now the public begins to react to that confession!

If you’ve bought a foreclosed property, beware!

Foreclosure Halt – What does it mean?

Stop Foreclosures

Many of the major lenders have now halted foreclosures in all 50 states.  Does anyone know what this actually means to homeowners and to the housing market?

Imagine what this will do in states like Arizona where 42% of their homes sales were foreclosures in the last quarter.

I was told that as many as 51% of all foreclosures were processed with faulty paper.  I actually expect that number to be higher because of how quickly loans were sold and resold in the past 7 years.  There were not enough processors to keep up with all that data.  And Countrywide (have any of you tried to deal with them before?) probably has 100% faulty paper.  Bank of America is still reeling from that merger.

So now what? What will the banks do with all the properties that have bad paper?  What if they find that they actually cannot foreclose on a property?  And people in the houses are not making payments?  It could be that the homeowners will find out no one knows to whom they should be making payments.

Here are just some who will be effected by the fallout of this latest housing turn-of-events:

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BofA halts foreclosure sales in all 50 states

US Map

Yup, all 50 states.  What is going on?

Ok, so we’ve read about the recently termed “robo signing” where foreclosure documents were apparently signed rapid fire without checking the facts.  Imagine that.  So, to avoid litigation, lending institutions are halting foreclosures until they can take the time to make sure the procedures are being handled correctly.

Interesting to me is Bank of America’s most recent quarterly report to investors where they state that Bank of America sold $453 million worth of foreclosed properties during the second quarter of 2010.  But wait, it gets more interesting!  They still have an inventory of properties valued at $1.74 billion.  Billion – with a “b”.  When I was growing up, billion was rarely heard or used.  Now it’s too common to get attention.

That’s a lot of remaining inventory.  In fact, nationwide estimates are that there is still $460 billion worth of shadow inventory. 

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Bank of America Suspends Foreclosures in 23 States

Bank of America

Chase just put 56,000 foreclosures on hold and now this announcement comes from Bank of America.

Bank of America, the nation’s largest bank, has halted foreclosures in certain states after evidence was disclosed that it too had ill-famed “robo-signers” rubber-stamping approvals of foreclosure cases without verifying their validity.

BofA is the third major mortgage lender, along with GMAC Mortgage and JP Morgan Chase, in two weeks to call for a freeze on foreclosures out of concern that faulty documentation could give borrowers grounds to overturn court-ordered evictions.

seven financial institutions ordered by regulators at the Office of the Comptroller of the Currency to reassess their foreclosure processes in light of the paperwork snafus beginning to surface.

Chase puts hold on 56,000 foreclosures

In case you missed that headline today, thought I’d repeat it here!

It seems company workers failed to follow the proper legal procedures in filing paperwork demonstrating that the lenders had the right to foreclose.

Remember the post I did about Producing the Note?  In there I wrote that “A request to produce the note requires the lender to prove it actually has the authority to foreclose on you.  The lender must officially produce the original promissory note, with your signature, in the lawsuit.”

Well, apparently enough of these cases have gone to court to gain attention!

10 Options for Sellers facing Foreclosure

Labirinth

Understanding the different options a seller may be considering is important when negotiating.  Here are 10 of the most common options for sellers in default or anticipating being in default.

1. Reinstatement of Loan (Cure): Paying the lender everything that is owed in one lump sum including missed payments, any late fees associated with these payments, foreclosure fees, legal fees and the principal owed during the delinquency. A cure may involve the seller curing or deeding it to the investor “subject to” the existing loans, and the investor will then cure.  Risk to the seller includes that the lender may accelerate the loan because of the due-on-sale clause, the seller no longer owns the property and the seller has no recourse if the investor doesn’t pay the loans.

2. Repayment Plan: A written agreement between the lender and the homeowner. These plans require higher payments than the regular monthly mortgage amount for a period of time until the loan is brought up-to-date.

3. Loan Modification: Involves changing one or more terms of a mortgage. Modifications may be considered to reduce the interest rate of the mortgage, change the mortgage product (i.e., from an adjustable rate to a fixed rate), extend the term of the mortgage or capitalize delinquent payments (add delinquent payments to the mortgage balance-only available in extreme hardship situations). Modifications are NOT easily granted and there must be strong, justifiable reasons for the request.

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