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Avoiding Foreclosure Tips: for homeowners behind in their mortgage payments and in danger of foreclose
Are you behind in your mortgage payments, or concerned that you soon might be? Have you received a preforeclosure letter from your lender? You are not alone.
This situation is widespread among Minnesota residential home borrowers who purchased homes in the years leading up to the house price peak, as well as those who extracted equity through cash-out refinancing. Today nearly one in every five residential home mortgages is underwater. Read the housing stats and information on foreclosure and short sales released January 4, 2012.
Funds Set Aside To Help Homeowners Avoid Foreclosure
The National Mortgage Settlement set aside significant funds - more than $2 billion - clearly designated for the 49 participating states and the District of Columbia to put in housing programs. The funds were supposed to help prevent foreclosures with programs like down payment assistance, foreclosure counseling and financial literacy training. There are several methods that homeowners in financial distress can use to stop foreclosure fast. Some methods require money, while others require agreement to forgo money by the lender or through the court system.
"This is neither the beginning nor the end of our work to hold banks and other institutions accountable for the destruction they've caused families, communities and country," said Illinois Attorney General Lisa Madigan when the deal was announced. "Today's settlement should serve as a warning."
Things To Do To Avoid Foreclosure
Don't be ashamed. Millions of homeowners are in your situation – many times through no fault of their own. A job loss, a serious illness or other circumstances can put you in danger of foreclosure. The economic downturn has led to many homeowners being "under water" in their loans, meaning they owe more than their home is worth, making it difficult or impossible to refinance.
Don't panic. If you've become one of those millions, try look at your options and make the best of it. Foreclosure, and its accompanying effect on your credit, is not inevitable. There are many options out there, and your circumstances may make one of those options feasible and desirable for you.
Keep your options alive. It is very important that you communicate with your lender. Many homeowners have lost their homes to foreclosure without ever contacting their lender. He will be able to accurately tell you your options. You will want to make a informed decision.
Work with a non-profit HUD approved counselor.
This would also be a good time to consult with a tax advisor and contact Realtor Jenna Thuening, a Certified Distressed Property Expert. We are specifically trained to work with distressed properties, understand the distress this may place on you, and will be able to help you explore foreclosure options. The good news is, many lenders would rather not foreclose. They take a large financial hit on a foreclosure. So in many cases, they'll consider viable alternatives. Some of these alternatives may keep you in your home.
Don't pay too much for help. If it costs you an arm and leg, something is amiss. You should not need to pay a fee before services are provided.
Be well informed of what you are signing -first! And then sign it yourself. Don't let someone else sign on your behalf.
Look out for "guarantees". No counselor can promise you that they can stop a foreclosure process.
Disability Income Insurance To Avoid Foreclosure
Foreclosure is something that many homeowners feel could never happen to them. The reality is - it can happen to anyone, especially individuals who are without income insurance coverage would something interrupt the paycheck they depend on. A homeowner may face sudden extenuating circumstances that force them to stop making timely payments. Such as unforeseen health problems, the death of family member, or divorce. We all wish to be spared these traumas. However, the trauma is much more complicated if when it affects a homeowners ability to make their monthly home payments. Home Destination recommends getting help as quickly as possible. Additionally, review come disability insurance options. If you don't have it, consider adding coverage that helps you make ends meet if unforeseen things happen that stop your paycheck.
Download and read Tips To Protect Yourself Against Mortgage Relief Scams provided by The Federal Reserve Board.
Download and read Home Destination's Mortgage and foreclosure Terminology PDF to help you make an informed decision.
While only certain homeowners will be able to take advantage of a loan modification as an alternative, it may be your best option because it keeps you in your home and typically results in the least damage to your credit.
Your lender may be willing to modify the terms of the loan, whether it's reducing the principal, lowering the interest rate or other creative strategies to make the loan affordable for you. As part of the stimulus package, the U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure.
This is the fastest-growing foreclosure alternative. Many lenders will allow a Short Sale, when the home sells for less than the amount of the loan. This is attractive for lenders because they lose less money than in a foreclosure. Also, Short Sales generally take less time than foreclosures, so the banks don't have to carry the properties on their books as liabilities.
And it's attractive for homeowners because the impact on their credit is far less than in a foreclosure. You may be able to buy another home in as little as two to three years after a Short Sale, compared with a typical seven-year wait after a foreclosure.
Short Sales are paperwork-intensive, and there are many, many details involved. If you're considering this option, it's critical to work with a trained real estate agent who knows all the steps required to successfully complete a Short Sale.
RE/MAX leads the real estate industry in agents who've completed the Certified Distressed Property Expert (CDPE) course or other specialized training. They understand the intricacies of these transactions, and they'll be able to advise and counsel you every step of the way. The U.S. Treasury has announced guidelines for streamlining and simplifying the Short Sale process. Keep in mind that no matter which option you choose, there may be tax and other financial consequences. You should consult with a tax adviser or legal expert.
Foreclosure (Cash for Keys)
One of the biggest problems in foreclosures is that homeowners sometimes physically damage the property, or even sell some of the fixtures, before leaving. Needless to say, this is not a good idea. It may expose the homeowners to financial and legal liability. It also makes the properties much more difficult to sell.
To prevent this, some lenders offer a program called "Cash for Keys." The homeowners receive a check for vacating the property within a certain time period and leaving it in good condition. If you have no alternative other than foreclosure, you should ask the bank about this option.
Tips From HUD
The U.S. Department of Housing and Urban Development has 10 tips for avoiding foreclosure:
Take advantage of Minnesota's Mortgage Payment Program, which offers you an opportunity to learn more about how to effectively manage your income, spending, debt, savings, plans to sell and buy a home, and other relevant money matters. Everyone wins when another family is kept in their home. Local government branches, housing market specialist, even lending entities - are offering workshops rich with hoe to avoid foreclosure tips.
• Don't ignore the problem. Your best options are available in limited time.
• Contact your lender as soon as you realize you have a problem.
• Open and respond to all mail from your lender promptly.
• Know your mortgage rights. Read and understand your contract.
• Understand foreclosure prevention options.
• Contact a HUD-approved housing counselor.
• Prioritize your spending. Be frugal till you have your feet back on the ground
• Use your assets. Ask question on how to do so.
• Avoid foreclosure prevention companies that are prone to scams
• Don't lose your house to foreclosure recovery scams.
Read more from HUD about avoiding foreclosure. Print and read more tips to help you avoid foreclosure
Related Articles On Foreclosure
Solving The Short Sale Puzzle
Through the complexities of foreclosures and short sales, you may have more options than you think. A CDPE can help bring extraordinary results. Jenna Thuening respects and understands your circumstances and can help you find your best options when facing a foreclosure or short sale.
Foreclosure Purchasing Needs Extra Care
While every home purchase requires due diligence on the part of buyers, buying a distressed property - a foreclosure or Short Sale- raises that requirement to a much higher level. Jenna's years of experience and extensive training will guide you through the process.
U.S. Treasury Program Helping Homeowners
Follow Jenna Thuening to best understand how the U.S. Treasury guidelines regarding Short Sales are intended to help homeowners avoid foreclosure. Learn how borrowers who complete a Short Sale are released from their primary mortgage debt.