Do not abandon your property. Taxes are very different for Principle residence and non principle residence. If you leave the property early, you may lose a lot in taxes and the tax man never stops coming after you. Penalties and interest add on each and every day!
Don't talk with strangers or open your door to them. It is usually a scam. They call themselves, "Investors." I can assure you the rip off is coming. I hear about another one almost every day.
Do not sign anything you do not fully understand. Many scam artists try to scam you out of your house and use your property for all sorts of things and never pay your loan or even consider talking to your lender. If they do call your lender they offer far less than your property is worth and the lender will never accept the offer. It is a fools game.
Don't wait to do a Short Sale. Time is very limited and not on your side. You need to sell your property and close escrow before the final foreclosure date! The foreclosure date is 111 days from the date of the NOD aka Notice of Default.
If the Banks are harassing you with phone calls, under the fair credit act, it is your right to make a written request to your lender to only contact you by mail if you wish to stop the calls. You may have to write any collection agencies as well if any loans get turned over to them.
If your property is foreclosed, you will not be thrown out onto the street in one day. You will be met usually by a REALTOR working for the bank, who will ask you nicely to leave and usually give you some time, such as two weeks. However, If the property appears abandoned your contents will be removed and brought out onto the driveway and thrown out.
For many of you in Denial which is very normal, I can assure you the bank will foreclose on your property and the average time the foreclosure begins is around 4 months. The start of foreclosure is called the Notice of Default, and is filed with the county in which your property is located.
You can ask me by email if your house has had a NOD filed. Simply email me your full address, and full name, and ask has NOD been filed?
It is not smart to wait for this to happen if you think you may qualify for a short sale. Start the short sale as soon as you know you can no longer make your payments.
Short Sales are usually, at no out of pocket cost to you. That's right! All fees are paid out of the sale of your property by your lender. However, HOA fees dues must be paid by you. Realtor commissions, taxes, escrow all paid by your lender. Don't worry if you don't like what you see you can reject the short sale offer from the lender, and let it foreclose at no cost to you.
A short sale is like any other sale of a property. You need to spiff up the place so we can take photos and get it sold and we have to get it sold in a short amount of time!
What are you waiting for? Pick up the phone, call Dante 951-234-7674 so we can get this done and make the bank take the loss.
A Short Sale, if you happen to have a qualifying hardship is the best option at this time. If not consider renting rooms and doing what you have to in the meantime.
A Loan Modification is a fools game and yet you see lines of people on the morning TV news every month lined up to pay the bank even more money. Most people, if not all, that qualify for a loan modification, would probably qualify for a short sale if they tried. Five years from now we will see the outcome of these Loan Modifications and I can assure it will be ugly for those who did decide to Loan Modify. Those who modify their loan, their house will be like a prison.
The Banks like to play you against yourself. When you make a decision stick to it. The lenders will call you and offer you a Deed In Lieu, or a Loan Modification, while short selling and then just foreclose on you. They don't play nice.
The banks love to play the game of saying you are in a loan modification, or a temporary Loan Modification, while you are paying the bank thinking everything is fine they are foreclosing on you behind your back, and never say a word while you continue to make what the bank calls "Partial Payments" which is not considered a full payment which is why the lender can continue to foreclose on you. They do this all the time!
Ask yourself why would the bank file a Notice of Default on your property if your loan modification was going through? There is only one reason a bank files a notice of Default, it is to foreclose on your property. A short sale may be the only way to beat the bank figuratively and time wise.
A short sale can rid yourself of the property and the excess payments.
When it comes to facing Foreclosure, Do something. Do not let it go without some sort of fight. You do not have to deal with your lender all that much, your REALTOR Broker will do that for you.
Don't bury your head in the sand.
Ask Yourself why so many are Short Selling their property?
Short Sales do work for a fair amount of people.
Short Sale bennefits will go away in 2013.
When you qualify for a Short Sale, the time is now.
A Short Sale is far better than letting your property go to foreclosure.
Consult your CPA for the tax benefits of Short Selling that both the U S President and the Governor of California have provided for you until Dec 31 2012. Short Sell Your Property.
One of the biggest mistakes some people make at this point is being too attached to their property. This will cause heartache, heart attacks, and a huge amount of stress.
The following is the most common options someone facing foreclosure can do along with the pros and cons...
Short Sale If a homeowner owes more on their property than it is currently worth, then they can ask a qualified REALTOR Broker to market and short sell their property. I will do the negotiation of a short sale with your lender.
A Short Sale requires the property to be on the open market and the homeowner must have a financial hardship to qualify. Hardships can be defined as a change in the financial stability of the people on the loan, between the time the home was purchased and the time of the short sale. Acceptable short sale hardships include but are not limited to: mortgage payment increase, job loss, cut in pay, cut in hours, unemployment, divorce, excessive debt, forced or unplanned relocation, and more.
* Pros: A short sale allows the homeowner to avoid foreclosure and salvage some of their credit rating. This also keeps foreclosure off the individual’s public record, and in many cases will allow the homeowner to avoid a deficiency judgment. The Borrower may qualify for another mortgage in as little as 2 - 3 years (as opposed to 5-7 years for a foreclosure).
* Cons: Short sales can be a trying process in which a homeowner is best served by contracting with a qualified real estate agent to guide the way. You can not short sell your house to a friend, family member, or anyone you know. You cannot collect any money from the short sale of the property unless you do a special short sale known as HAFA Short Sale.
HAFA Short Sale A HAFA Short Sale - Home Affordable Foreclosure Alternatives has some different options in a short sale where as the buyer gets up to $5,000 at the close of escrow. A lender will pre price the property for sale on a price that the bank will accept for the short sale.
I believe it might be wise to apply for the HAFA short sale with the bank, but be ready to deny the HAFA portion and see what the bank wants. You have an option ( a small time frame ) to deny the HAFA portion and remain in control.
* Pros: you get up to $5,000 at the close of escrow to help cover moving expenses.
* Cons: Banks generally do not like following government guidelines unless they set it up for themselves. So... lenders tend to have a way of making this short sale far more difficult to do. Generally a lender will pre price the property 10% above market value, killing the option of selling the property and in the contract of the HAFA arrangement you have automatically agreed to do a deed in lieu or voluntarily give up your property in as little as 120 days.
Loan Modification Homeowners can apply for a Loan Modification of terms to reduce monthly payment. I call this a banks trap. You will be trapped in your home for a long long time. The payments will go up in a few years just after the benefits to short sell go away.
* Pros: Allows homeowner to avoid foreclosure and stay in the home.
* Cons: Your credit report is Dinged quite heavily right away, when you apply for a Loan Modification. Fewer than 10% are granted Loan Modifications. It requires that a homeowner qualify for the new payment and will often require full documentation. The Lender has to be actively pursuing modifications. No lenders are known for giving Principle Loan reduction, so you still owe the same amount plus fees, back interest, etc. This turns most existing loans into a 40 Year loan in which you will be on the hook for and be unable to sell the property at any time until you have positive equity. This could be 10+ or so years. Should you sell at any time after January 2013, if you are upside down by 200,000 and your property sells, it will be like paying taxes on 200,000 of regular income for that year. You Must pay tax on any difference. The IRS and the California Franchise Tax Board will be after you to collect for the rest of your life with penalties and interest, adding each and every day, and Bankruptcy is not an escape for Tax issues. There will be no forgiveness after the end of 2012! Contact a CPA and verify this Tax information.
Reinstatement A reinstatement may seem like the simplest solution for a foreclosure, if you happen to have thousands of dollars laying around in the bank. The homeowner requests the total amount owed to the mortgage company to date and pays it. This can be done and will reinstate a mortgage up to five or six days prior to the final foreclosure or trustee sale date.
* Pros: Does not require the mortgage company or lender’s approval.
* Cons: Requires that a homeowner be able to pay all back payments, fines and fees. Usually causes people to borrow more money from family or friends to get further into debt.
Forbearance or Repayment Plan Lets say you were out of work for a couple of months, but now you are working and things are fine. During that couple of months you were unable to pay your bills. A forbearance or repayment plan involves the homeowner calling the lender and asking to get caught up by requesting a forbearance. Most lenders may do this but they will only do this once and you must have an excuse that is verifiable, such as you were out of work for two months and now you are caught up. Yes it will cost you some money. What doesn't?
Pay back the mortgage company over a period of time. You would be typically making the current mortgage payment in addition to a portion of the back payments they owe. Keep in mind the bank has to approve of this situation.
* Pros: Allows the homeowner to make back payments over time.
* Cons: Requires that a homeowner be in a financial position to pay not only their current mortgage, but also a portion of the back payments owed. Mortgage companies will require a homeowner to qualify with documentation for forbearance.
Rent the Property or Rent out Rooms We all know renting out the entire property usually will not cover the mortgage payment. In Some cases it may, and making up the difference may not be that difficult for you. I know many have elected to rent out rooms of their home to make up the difference and are doing well with it. There is an adjustment period to get use to one another but this is a very viable option. If you do not have a hardship for a short sale this may be your best option.
* Pros: Allows you to keep your home.
* Cons: The issues that can arise with a rental property are many, and rent often does not cover the full cost of property ownership and maintenance. Renting a home out to others will cost you more as they are not the owner will not care as much as you do.
Deed in Lieu of Foreclosure Also known as a voluntary foreclosure, a deed in lieu allows you to return the property to the lender. The Lender must approve of this option. If there are second liens, tax liens, personal liens,etc this is usually not an option. This is usually best done with a Real Estate Attorney. This option is really not any better than a foreclosure.
When a bank offers you a deed in lieu, think what are they asking you. They are asking you to bail and save them money and just foreclose on your property. They usually get what they want from you, and fail to give you anything they have offered you such as moving expenses.
* Pros: Sometimes a real estate attorney can negotiate a successful deed in lieu, in a manner whereas the lender will forego their right to a deficiency judgment. This is usually with the help of a qualified Real Estate attorney and paying their fees.
* Cons: Requires you to vacate the property, hire an attorney, and a deed in lieu will usually be reported to credit bureaus the same as a foreclosure.
Bankruptcy Some think Bankruptcy is some magic solution to to stop lenders from foreclosing on your house. At best it may stall the lender around 30 - 45 days. That is not a huge gain considering you just filed for Bankruptcy. If you have non-mortgage debts that cause a shortfall of paying your mortgage payments and a personal bankruptcy will eliminate these debts, bankruptcy, may be a viable solution.
If you are considering disposing of your property it may be wise to wait until you have disposed of the property before you file for bankruptcy. Using Bankruptcy to keep your property may not be wise. Using bankruptcy to think it will stop lenders from taking your house is a myth.
* Pros: Does not require lender approval.
* Cons: If a homeowner cannot afford their mortgage payment, a bankruptcy will barely stall—not stop—the foreclosure process. Bankruptcy can be costly, is damaging to credit scores, and can only be declared once every seven - ten years. Most banks know how to get around this in a very short amount of time. Ruins credit. Life will became much more difficult in some ways.
Refinance If you have sufficient equity in your property and your credit is still in good standing, and you have a documented income, you may be able to refinance your mortgage.
* Pros: In some cases, you can lower your payments.
* Cons: In today’s market, a refinance will almost always raise mortgage payments, and is an expensive process. Usually, must show a reliable source of income. Refinancing a home costs money.
Service Members Civil Relief Act (Military Personnel Only) If you are a member of the military and experiencing financial distress due to deployment, and you can show that your debt was entered into prior to deployment, you may qualify for relief under the Service Members Civil Relief Act. The American Bar Association has a network of attorneys that will work with you in relation to qualifying for this relief.
* Pros: If qualified, this may lower payments on your consumer debt in addition to mortgage payments.
* Cons: Must be active in the military to qualify.
Sell the Property Homeowners with sufficient equity can list their property with a qualified agent that understands the foreclosure process in their area.
* Pros: Allows homeowner to avoid foreclosure and keep some of their equity.
* Cons: Selling in a down market is not the best time to sell however it is far better than foreclosure.
Foreclosure Over 60% of the homeowners who are behind in their payments are afraid to read their mail and do nothing, thereby letting their property go to foreclosure. Most vacate their home long before their property is even taken and suffer down the road with tax issues for the property is no longer considered their principle residence.
* Pros: Allows homeowner to move on and no longer have a house payment.
* Cons: Where do I begin? The song, "It's no fun being an illegal alien" comes to mind on what life may be like for those who go through foreclosure. Credit issues of this magnitude is a difficult thing to shake. If this is your first option and you have tried to do nothing else, I would be very shocked. You can at least try something. In most cases foreclosure is not the fault of the homeowner, due to loss of work in our economy. These are the people I want to help the most.
Strategic Foreclosure The decision, to walk away from their property and let it go to foreclosure.
* Pros: Allows people to walk away from their property and run from their problems.
* Cons: These are people who simply give up. They probably give up on everything. Their word or their word on a contract means nothing. Can anyone ever trust them? These people aid to destroy our economy, and way of life more so than those who are not in control of their situation.
It is wise to consult with a REAL ESTATE ATTORNEY, a REALTOR, and a CPA to figure out your best options.
I am a Real Estate Agent, REALTOR, in Southern California and I do Short Sales for nice people who need help. I am easy to talk with on the phone so feel free to call and ask questions. Dante Walker at Posh Realty. 951-234-7674 or 323-642-7674. If at any time prior to opening escrow, you think doing a short sale is not right for you, I will respect your wishes and we can cancel.
If you have any questions, please call me
9am - 7pm, 7 days
Dante Walker - Posh Realty
(951) 234-7674 or (323) 642-7674. I'm here to help you!