BUILDING WEALTH ONE CHANGE
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For those facing FORECLOSURE - This time can be particularly disturbing, stressful, crazy, and depressing. You will have people calling you out of the blue, people knocking at your door, creditors calling you, and more. As a realtor I know I have contacted people to see if I can list their home before it's taken away. Considering where the real estate market is right now you will undoubtedly have a lot of strangers telling you how they can help you. You need to know your options. Depending on where you are in the process and the type of language in your note there may not be much time left. Click here for information on Oregon Law Summary. Federal help is on it's way. Check out Financial Stability - Obama's recovery plan (Homeowner Affordability and Stability Plan) to help you make it through this tough time.
WHO'S CONTACTING YOU AND WHY? Note: This information is directed to those that live in Oregon, other states may have different laws and effects. Your Lender(s) You're lender wants you to pay your bill. When they don't get paid they want to know why and if you are able or willing to make payments. If you're behind due to an unexpected event they might be able to help if it's temporary. You may be able to give your house back to them without owing anything (deed-in-lieu of foreclosure). Their goal is to get paid, not to own real estate. A short sale (when you owe more than what you can sell the home for) is all to common these days. Talk to your bank - this is a much better option than foreclosure. Your credit will still be damaged, but not as bad as if you foreclose. Many lenders are restructuring loans. If you don't want to move but the payments are out of hand talk to your lender about this option. FHA has new options available to lenders to help you save your house by making changes to your financing. Loan Modifier Loan modifiers could be lenders, Realtors, attorney's, investors, and scam artists. There are people, for a fee (some reasonable, some ridiculous) that will contact your lender and try to obtain a loan modification (where they adjust the rate/terms, etc so you can afford the monthly payments). This is something you can do on your own, by contacting your bank. But, like doing your taxes, not everyone is cut out for dealing with all of the paperwork and following instructions that can seem like they are never ending. Fees should be reasonable - just like when doing your taxes. Evaluate all of your options before selecting someone that has contacted you. Always contact your lender first before hiring a loan modifier. Due to House Bill 3630 there are certain restrictions to how certain professionals can work, but be careful as lenders, real estate agents, and attorney's have different rules than others that are not in these professions. For example, a person who is not one of these professions cannot collect up front and if they are not successful they cannot charge you. This is often (but not always) why their fees are much higher than someone in the profession. Real Estate Investors Investors know that you're in financial distress and they want to see if they can buy your home at a price that will make them money. Sometimes they can help you deal with the lenders by working on a short-sale (buying your home for less than what you owe the lender) or buying the home before it is foreclosed upon. The good investors will let you know the whole truth about the process and insure that they obtain for you a "waiver of deficiency" so that you will not have to pay the amount still owed in the event of a short sale. They will explain that you may have to pay taxes on a 1099 that the lender gives you when the lender doesn't get all of the money it's owed. So if you owe $100,000 and they settle for $75,000 you may get a 1099 for $25,000 that you will need to pay taxes on. Note that the Foreclosure Prevention Act of 2008 (mainly on a first mortgage in an owner occupied home) may keep you from paying taxes on the 1099 even if the lender sends you one. Many real estate investors have enough experience to ensure you are fully informed and you get the best deal possible in their eyes. Depending on where you are in the process (i.e.: number of days until auction) it is possible you are getting the best deal. Be careful though as some investors are brand new and although they may have the best intentions, they are not experienced or patient enough to get you through the entire process. Realtors Realtors are in the business of selling homes. They want to sell yours. If you obtain a realtor in time and you have equity in your home you might be able to sell your home and walk away with some money. Your lender will be paid, the realtor will be paid, and you will be out of your predicament. Some realtors can also help with short-sales if you have little or no equity in your home. Some agents are also real estate investors so they could help you on either end. Many won't help with loan modification, even if that is your best bet because they are in the business of selling homes. Attorneys Attorneys will want to help you file bankruptcy. Depending on your financial situation they will help you file chapter 7 (no payback) or chapter 13 (payback plan). If you file bankruptcy it is possible that you can stay in your home a little longer. Sometimes it's only 30 days, other times it could be extended so long as you are making all of your monthly payments. They should inform you of your homestead exemption and how that plays in the big picture of your financial future. Although bankruptcy stays on your record for 7-10 years, you may be able to rebuild your credit rating if you find ways to re-establish yourself. Depending on where you are financially, bankruptcy may be an option for you. You may still be able to work with a realtor or a real estate investor while filing for bankruptcy (ask your attorney). Some attorney's are getting into the business of loan modification because they can charge more than their traditional hourly fee. Some attorney's are now specializing in loan modification as it can be much more lucrative than their other business. Others do process loan mods at their regular fee, some have minimums, most charge whether there is success or not. Mortgage Brokers/Hard Money Lenders Mortgage Brokers/Hard Money Lenders are in the lending business. They may be able to get you into a different loan, provided you can make the payments. Your interest rate may be higher, but it may give you time to get re-established after your unexpected event. If you can afford the monthly payment this may be a good option for you. Mortgage Brokers are now setting up a practice of loan modification. Verify what fees they are charging you and determine if you have to pay even if they are not successful in the modification. SO WHAT DO YOU DO? There are so many options. Which one(s) should you consider? It all depends on your specific personal situation as each is as different as your options. There sometimes isn't one right option. In addition to getting out of your current predicament, consider how long it will take you to reestablish yourself after the dust settles. Bankruptcy takes 10 years to come off of your credit report. Other obligations may not take as long. In bankruptcy you may or may not be able to keep your house. If you get a 1099 you may have to pay taxes on it. You cannot discharge taxes when you file bankruptcy. If you get a deficiency judgment (due to a short sale) you may owe the money, unless you file bankruptcy and it is discharged. If you get a new loan, can you make the payments? New laws have been passed (House Bill 3630) and may change the way short sales are done. Also, review the Foreclosure Prevention Act of 2008. There is discussion about deficiency judgments and if you'll need to pay taxes (will the bank issue a 1099 for the money it forgave). No matter who you talk to know what your option are - and the ramifications. I am only one person you can talk to as you explore your options. You may also be able to get help from the Portland Housing Center. From the Portland Housing Center website: Facing foreclosure? Please contact one of the following
agencies: Homeowners can call 1-800-SAFENET or go to 211Info to find a counselor to help them. If nothing else, before you sign anything contact HUD. They have a list of approved Oregon counseling agencies. They may have tips for you. MY GOAL FOR YOU My goal for you is to be sure you know your options and that you act quickly enough to preserve as much of your equity, credit and credit score as possible, while balancing your income with your debt. Maybe you need a clean start. Maybe you just need to regroup. You have choices. I want to be sure you know what they are. I am a licensed real estate agent (in Oregon), I am a real estate investor, but most of all I am a money coach and I want to see you work out the best situation for yourself. I am NOT a foreclosure consultant. I cannot save your home -only you can figure out what to do by getting information and facts that are particular to your situation. I help you find the help you need. Explore all of your options. Get your head out of the sand! No matter how stressful, embarrassing, frustrating, depressing... do NOT ignore your situation. The quicker you investigate the more options will be available to you. Step up to the plate and trust yourself to make good decisions. You can do this. Get all of your facts and understand the process before you make any moves. Make more than one call and listen to your gut. For personal help contact me at myficofixer@comcast.net. BOOKS LINKS |
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