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Top Solutions And Alternatives To Foreclosure

Facing foreclosure is a stressful time in a homeowner’s life; the thought of losing a home is an unsettling one. You took time finding the right place for you and your family. You put the effort in getting it set up and furnished for your needs. You probably looked at several other homes until you found your special one. With these thoughts in mind, you may come to the conclusion that you don’t want to lose your home and you would like to fight foreclosure. Read on to find out alternatives to foreclosure.

Negotiate, Negotiate, Negotiate
In almost all foreclosure cases, the first step is to go and negotiate with your mortgage lender. The sooner you talk to your lender, the more likely it is that they can come up with a solid solution for you to avoid foreclosure. Tell them about your situation and prove to them that you only fell temporally behind and you can stay on top of your payments if they can help you out. The lender may be able to lower the interest rate on the mortgage for you or even extend the length of the mortgage term in order to lower the monthly payments. This is the first step to finding an alternative to foreclosure.

Refinance
Depending on your financial situation and how long your money flow problems are going to last, you may want to consider refinancing your home. If you still have good credit the interest rate on a new loan might be lower than your original mortgage rate. Also if you have enough equity built up in your house you might be able to borrow money from that, in order to pay past due mortgage amounts.

Government Assistance
The federal or state government might be able to provide you with assistance if you want to stay in your home. You do have to qualify for a lot of their programs, but it is worth looking into. For instance, if you have an FHA insured loan, your lender may be able to get a one time payment from the FHA insurance fund that will bring your mortgage payments up to date. Also you will want to look into your personal state laws and assistance programs, some can provide help to homeowners who want to avoid foreclosure.

Transfer ownership
If you have exhausted all options for staying in your home and avoiding foreclosure, you may want to consider giving up your home to stop the foreclosure. Sometimes, to avoid a foreclosure, it means selling your home to pay off you debt. This is a way to get out of your mortgage payments and to keep a foreclosure off your credit rating.

Facing and fighting foreclosure can be an emotional and financial roller coaster. Even if you feel like you have exhausted all your options for saving your home, make sure you talk to all knowledgeable people in the field of foreclosure, before giving up. Sometimes people forget to talk to neighbors, who may have gone through similar situations and may have found a way to save their home that you did not think about.

By: Nick Adama

Article Directory: http://www.articledashboard.com

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This is a complex question and the answer will vary depending on your specific situation. I cannot stress enough, the importance of seeking a qualified consumer attorney familiar with the applicable laws in this area. The wrong advice could cost you thousands of dollars!

Short Sale: A short sale is the process of selling a piece of real property for less than what is owed on the loan(s). Short sales require the approval of the lender who will be affected by the sale, because the funds received will be’short’ of what is owed to the lender. For example, consider a person who has real property worth $500k, with a first mortgage of $400k and a second mortgage of $200k. In this case, the second mortgage holder would have to approve the short sale and agree to accept less than the full balance owed on the loan. Even if the lender agrees to accept this arrangement, the borrower is not entirely off the hook just yet. A short sale by definition is an agreement to sell property for less than what is owed. If the lender agrees to accept a short sale, they are most often agreeing to forgive the remaining debt that is owed so there is no deficiency balance the borrower can be sued for (Read the agreement very carefully. Some lenders may try to hold you responsible for any deficiency balance as an unsecured creditor.) However, the forgiveness of debt is a taxable event that can trigger a 1099-C by the lender requiring the borrower to pay income taxes on the amount of debt forgiven. With the drastic decrease in home values over the last several years, the tax liability on forgiven debt can be thousands of dollars in this scenario! There may be exceptions to this general rule under State and Federal law and consumers are strongly encouraged to discuss their potential applicability with an accountant before moving forward with this option.

Foreclosure: Foreclosure is the process of taking back property, generally pursuant to a deed of trust or other security interest. California is a non-judicial foreclosure state, meaning the lender does not need to get the court system involved in the process in order to recover the property. Judicial foreclosure is an available remedy in California, however it is the rare instance that it is pursued. Borrowers who are contemplating letting their home foreclose need to be aware of exactly what that decision means to them.

Purchase Money Rule- This statute prevents a judgment from being entered against you for any deficiency balance resulting from a foreclosure assuming the following is true:

1) The lender(s) loaned you 100% of the money to purchase the property. (Includes 80/20 loans on 100% financed property).

2) Upon the original purchase, you occupied the home as your primary residence.

3) The loan(s) have not been refinanced, or purchase money HELOC’s have not been paid down and borrowed against.

One Action Rule- Lenders in California are allowed to take but one action against you, either a non-judicial foreclosure (ie. take back the property) or a judicial foreclosure (ie. sue you on the contract/loan.) Because of the uncertainty and costs associated with judicial foreclosures, they rarely take place. The One Action Rule may not apply to a sold out junior lienholder who has not had the option to take their ‘One Action.’ Subject to the Purchase Money Rule above, junior lienholders may have recourse against borrowers in this instance.

Forgiveness of Debt Rule- California and the IRS tax you for the amount of forgiven debt in any given year. Debt is forgiven when the lender gives up all rights to collect the debt or are otherwise leally barred from collection.

Insolvency Exception- California and the IRS both exclude forgiven debt as taxable income, but only to the extent you are insolvent. The insolvency test is met when your debts exceed your assets, and assets include all real and personal property including retirement accounts.

Bankruptcy: For those individuals who have refinanced their original loans, taken out equity lines, or in addition have other significant debts they want to eliminate, bankruptcy may be the choice for them. In this instance, bankruptcy would discharge any money owed to the lender for a deficiency balance and also prevents the lender from suing to collect it. Moreover, bankruptcy would wipe out any tax implications that would normally result from a short sale or foreclosure.

The bottom line here is to do your homework and get competent advice before choosing the course of action that best suits you.

For more information regarding short sales, forecloses, or for any other bankruptcy law questions, contact The Larkin Law Firm at http://www.live-debt-free-now.com

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Fight Back Foreclosure – Use Information Against Your Lender

A smart home owner can use a little known fact to their advantage to try to stop foreclosure by their banker. Did you know that it is more profitable for mortgage companies to help you retain your property than actually go through with a foreclosure? On average it costs the mortgage company between $50,000 and $100,000 to foreclose on a property. In the long run, it would be to their advantage for them to negotiate with the home owner to find a solution to the problem than evict them from their home. Many times, the home owner has to be the one to ask for an alternative option from the mortgage company though. It can be a "win-win" negotiating tactic.

What are the costs to foreclose? First there are the expenses of going through the legal process of eviction. The mortgage companies have to hire local attorneys that specialize in these types of procedures. Then there are fees associated with filing the lawsuits and eviction measures. If the home owners fight back, then the lender’s legal fees begin to mount quickly. Once the legal action or eviction notice is final then the mortgage company has to pay the costs of evicting homeowners if they oppose leaving the property voluntarily. A banker with any intelligence would want to work with a home owner to stop foreclosure.

After securing the property from the evicted property owner, the bank is then left to deal with the consequences. Often, if a home owner doesn’t have the income to keep up their mortgage payments, they also didn’t have the cash to repair the property either. And some of them, in anger over the whole situation, destroy the property before they walk away. All of this now falls on the mortgage company to deal with. Whether the property was damaged due to neglect or spite, the mortgage holder will usually not do anything about it. This makes the value of the property fall and the longer it is empty the further the value declines. In the end, the mortgage company will receive far less for the property than what they would have if they had worked with the owners to stop foreclosure before it began.

Even if the mortgage holder doesn’t do anything to preserve the property, they still have to deal with the added expenditures in owning that home. Any taxes that are due on the property have to be handled by the mortgage company. And, some level of home owner’s insurance will be required on the property to protect the lender from accidents to the property. And when they try to market the property, the mortgage lender will need to use local real estate agents. That means they will accrue commission fees when the property is ultimately sold. There is absolutely no profit for a bank to incur those costs when it would be more effective for them to negotiate with the current home owners. This is just one piece of information that can help you to halt foreclosure.

By: Nick Adama

Article Directory: http://www.articledashboard.com

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Keep Your Goals In Mind When Defending Foreclosure

When foreclosure happens, many homeowners simply go into hiding for months at a time. A few weeks before the property is auctioned off by the county, they decide to look into options to save the home. But by this time, unfortunately, it may be far too late, or the only good option presented to the borrowers comes from a foreclosure rescue scam. In the end, the borrowers lose even more money.

Thus, it is almost always better to begin fighting foreclosure as early in the process as possible. Even before they have missed a monthly payment, homeowners should contact the bank and inform it of any pending financial hardship. Forbearance plans may be available to lower the mortgage bill, while other monthly expenses can also be negotiated down or eliminated completely. Timing is the most important factor in preventing foreclosure.

But for the borrowers who are already in foreclosure, the further along in the process it gets, the fewer options will be available. A repayment plan may be feasible if only a few payments are missed, but can be too expensive otherwise. A loan modification may be an option early in the delinquency, but after numerous payments have gone delinquent, the chances of obtaining an affordable plan begin to drop dramatically.

Even defending the foreclosure in court presents problems for the homeowners. What, exactly, are they looking for from the court process? If the goal is to save the home, any defense should take into account a reasonable solution to foreclosure that will give the homeowners an affordable payment. Without an affordable payment plan, there is little reason to attempt to keep the property.

This is the case for homeowners defending a foreclosure case or attempting to fight a foreclosure scam company. If there is no reasonable plan to save the home and make payments to the appropriate party, then there is little reason to attempt to hold onto it. There are other goals that may be pursued in the courts in order to fight a wrongful foreclosure or hold a scam operation accountable.

Another reason to bring such a case into court is for the homeowners to obtain money they lost due to a breach of some duty or violation of a law by the lender, servicer, or foreclosure rescue operation. Money damages may be awarded for such violations, and money and equity lost due to a scam can often be won through a judgment in the courts. Numerous courts have awarded homeowners significant damages from foreclosure scams.

Finally, another good reason to resolve foreclosure issues in court is to deter abuse and fraud. Companies that take advantage of homeowners by providing false or blank documents or changing terms at the last second without the borrowers’ knowledge should be taken out of business. While the courts are not always the best forum in which to hold banks or politically-connected companies accountable, they do offer one more option for homeowners.

It is vitally important for homeowners to keep in mind their goals when they defend a foreclosure in court or bring a case against a lender or scam company. Without doing this, they can find themselves back in a bad situation, agreeing to make payments on a plan that they simply cannot afford. This is another reason borrowers should carefully evaluate their financial situations before moving ahead with any plan to stop foreclosure.

By: Nick Adama

Article Directory: http://www.articledashboard.com

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