How to Avoid a Foreclosure

Communication and Knowledgable Representation are Keys to Avoid a Foreclosure

There are multiple steps to take when wanting to avoid a foreclosure. Some homeowners are concerned when they get behind on one payment. Depending on the bank or lender, the large institutional lenders will typically work with you for several months. In 2009, for example, Bank of America, depending on the state and market conditions, is working with buyers for three to five months before they will post a property for a foreclosure sale date. The most important thing is to communicate with the lending institution, and keep them updated on the condition that is causing you to be behind on your payments. However, just because you communicate does not mean that they will work with you forever. A recent homeowner who was communicating with Bank of America was 3 months behind and promised to make a payment at the end of the 4th month for three payments. When the owner called Bank of America to make the three payments, they were informed that their property was posted for foreclosure. The homeowner again requested for the bank to work with them but were told they would have to now pay the attorney fees in addition to bringing the payments current. This significantly changed the current course of plan for the homeowner since they struggled to get the three payments together. Now the loan would need to be reinstated (the reinstatement fee was slightly over $1,000 for this owner) with additional monies to get the home out of foreclosure. Since the bank would not accept payment until the homeowner contacted the attorney to pay the reinstatement fee, it pushed the owner into the next month's payment. To recap, the homeowner now owed four back payments, plus the current payment, plus the reinstatement fee. For this client, the bank only offered the option to get current, denying a loan modification and also a forbearance. The owner had to come up with all the money or contact an attorney to file bankruptcy as a means to save the equity in their home. They could have submitted for a short sale, but there was equity in their home so the bank would not consider the short sale or work with them to extend closing if they had a buyer. That just does not sound fair.

When you get to this stage it becomes more difficult to extend your time. Without being able to raise additional funds for the reinstatement fees and all back payments you may have limited other options.

A “Forbearance” is when you get the lender to add the back payments to the note and start with a new payment, and start making payment. If you are able to set up this plan with your lender you must make sure you don’t get behind again. Most lenders have limited situations that allow you to qualify for their programs. A death in the family, sickness, divorce, and loss of job are some of the ways to qualify for forbearance. You have to have proof to make this work.

If you owe more than the home is worth then you may qualify for a short sale. You typically must have your home listed for sale and need to have a contract in most cases to qualify to stop the foreclosure sale. It is important to have an agent that has exposure to a large group of buyers to let buyers know that you are looking for offers. NoForeclosure has access to large groups and can send out your property information to its user base to work on an offer short term. Another way is through property auction sites. The MLS is always good, but the home has to be priced right, and your agent must understand the short sale process. Our agents are experienced and are here to help.

If you are not upside down and you can sell your home without the lender taking a loss on the note, then many lenders will not extend the foreclosure date. So, if it is not a short sale you have to get a buyer that can close quickly. In this market you need to make sure that the lender has the ability to move quickly so you don’t lose your home during the process. Many homeowners will look as a last resort to put the property into bankruptcy to extend the foreclosure date so you know that the property can be saved.

You can also go to http://www.freddiemac.com/avoidforeclosure/ for additional helpful information.

If you feel you are in the early stage or final stage of the process let us help you to take action with a game plan to effectively market your property as an option. It is best to review your sale alternatives early and not wait until the last minute. Even if you know you will not walk away with any money, if you would qualify for a short sale at least you could have the option to stay in your house longer. If you have equity in your home let us help you to get it so you can walk away with cash in hand.

Contact us today to discuss your various options.