RPB answers:

You have to be familiar with your lender’s procedures and criteria regarding short sales, and then work it to your (or your client’s) advantage.

RPB answers:

There’s a better alternative to both regardless of where you are located.
It works like this…
You have a $350,000 mortgage, broker opinion determines that the property is worth only $245,000 in the current market. Tom note buyer offers $130,000 for the note. W/Conditions Attached

If his bid is accepted, Tom Note buyer becomes the owner of the mortgage. He then contacts you the homeowner and offers to cut the principal if you want to stay in the home or pays you for the deed and resales it.
And yes…it is very legal!
It’s not a new process.This way usually works best if you are already behind or seriously delinquent. It’s what makes the lenders want to deal. I guess you could say it’s been sort of a secret although it’s not secret.
This way moves pretty fast compared to all the flusterclucking that goes with short sale, foreclosure, bankruptcy,etc. Options.
Clients usually end up free of the property, no liability to the foreclosing lender and none of the foreclosure associated tax situations. At best, client may actually walk away with money in their pocket. It’s not unheard of.

I am affiliated with a group(I’m in Texas, but we function nationally) that utilizes this method and has helped others with very similar situations. As I wrote previously, this method could eliminate you dealing with the foreclosure process altogether, along with any of the negative credit marks, deficiency judgment and tax issues associated with foreclosure. Oh yeah,it’s a free process at that. Yep, No charge to the client!

I can’t really speak for them rather or not they can help you but just
go to http://www.stopforeclosure-tx.com/foreclosure-help/ and complete the contact information.
Warmest Regards…

RPB answers:

A short-sale is a last ditched effort by the seller to get rid of their house before it goes into foreclosure and ruins their credit. With a short-sale you will need to make an offer on the property just like you normally would. The listing agent then needs to take the offer and get it approved through the lender. They will have to agree to take less than what is owed on the loan. Just a fair warning…. Not all lenders are willing to do a short sale. They have every option just to hold out and go through with the foreclosure process in March.
I am curious what city is the property in? I am a real estate agent and do a lot of properties in Orange County and Riverside County. Let me know if I can help. Ginac72@yahoo.com

RPB answers:

If you have a contract to purchase in a short sale and you do not agree with the second lien holder you can offer $5,000.00 to them as total pay off from the offered purchase price contract if the first lien holder also agrees.Most of the time the buyers contract is refused and it still goes into foreclosure because the second lien holder will not accept the $5,000.00.
Good luck

RPB answers:

Mortgage insurance is a policy paid for by you that guarantees the lendor that if you shoudl default on the loan that they will at least get repaid what the loan amount is.

This is required on all loans where the downpayment is less than 20% of the price of the house. The reason for this is in case the value of the house drops and you end up owing more on the house than it’s worth and then defaulting on the loan.

After you have carried PMI for 2 years, you can have the ratio re-evaluated and if you owe less than 80% of what the property is worth, then you can drop PMI. You will have to pay for an appraisal out of your own pocket, though (about $300-400), so keep up with the market in your area so you have an idea of what it is worth.

If your appraisal comes back and shows that the loan is less than 80% of the appraised value, mail a copy of the appraisal and a request to the mortgage company to drop the PMI. You must, however, carry it for at least 2 years.

PMI will automatically be dropped once the mortgage balance reaches 80% of the original appraisal on the house. Federal law requires this. However, if your house is appreciating at a fast rate, you will be wise to hire an appraiser and have it dropped. The mortgage company only keeps up with the balance on the mortgage. They do not keep up with the increase in the value of the property.

RPB answers:

You should not be if you say the magic formula truth in lending act .

RPB answers:

You have to have PMI; it’s to protect the lender, not you.

Most, but not all, lenders will remove their PMI requirements if:

1. The loan to value ratio on your loan is 80% or less. (Some require 75% or another LTV).
2. You have made your payments on time for two years.

RPB answers:

UNLESS you put down 21% of the house costs you will be required to pay Principal Mortgage Insurance PMI . This pays back the outstanding principal (not value) to the mortgage holder not you. It is a reasonable insurance fro them. A ‘Mortgage Insurance’ that covers your mortgage is a rip off. Get term life only – better deal.
Visit daveramsey.com to learn what bankers pray you never ever learn or apply in your life. How to own your money.
Read ‘house buying for dummies’ b4 you sign any thing. Fixed rate only 30 yrs or less equal to 1 week take home pay for P&I.
Or we get to visit you.

RPB answers:

Get a co-signer with good credit and they can help you rebuild your credit to a good rating with any company

RPB answers:

There are more that a few lenders who specialize in credit cards for people with bad credit. You just have to look a little harder than most people have to.

And getting a card after you’ve had a few problems doesn’t necessarily mean that you have a higher than normal rate. Like I said, you’ll just have to compare between credit lines, yearly fees, and interest percentages. Just make sure you do your homework BEFORE you commit, and you’ll be fine.

You can find some offers for credit cards, both secured and unsecured here:

http://www.axalda.info/bad-credit-cards.html

RPB answers:

Usually student loans are very lax on requirements. I have very bad credit and had no issues getting loans w/o a co-signer. Mine are through wachovia.

RPB answers:

I am a retired banker and the answer is yes. Some student loans are guaranteed by government while others are not. If not gov’t guaranteed then most likely a guarantor/s (co-signer/s) will be requested. Almost always this will have to be parents with sound credit. This is a requirement because a very great many students after they graduated declared bankruptcy and walked away from these loans. Now the guarantor/s (co-signers) must implement the guarantee and pay the loan. You then have the obligation to pay them back since they will likely be parents.

RPB answers:

You could ask your bank if they are willing to do a short sale.

A short sale is a sale of real estate in which the proceeds from the sale do not cover the balance owed on a loan or loans on a property. Lenders accept a discounted payoff on the loan and allow the sale to close escrow. The lender will agree to discount the loan due to an economic hardship on the part of the mortgagor, and the homeowner will sell the mortgaged property for less than the outstanding balance of the loan, turn over the proceeds to the lender, most often in full satisfaction of the debt. A short sale is accomplished through negotiation with a bank’s loss mitigation or workout department on the part of the real estate professional, but the lender has the right to approve or disapprove any proposed sale. Main factors contributing to the lender’s decision are the borrower’s financial situation and the current state of the real estate market.

RPB answers:

They may not deny you, but it will probably be over a year before you can get into a new mortgage without putting a substantial amount of money down. Make sure that you are working on improving your credit right now.

RPB answers:

It is true, if the bank agrees. It is usually not in their best interest to agree, as they forfeit the money you took from them. They can not obtain it via other methods as they can in a foreclosure.

Ask your lender if they will accept the deed in lu of foreclosure. If there is pretty good equity they very well might.

RPB answers:

The list of various methods to stop foreclosure that is presented below is a nearly comprehensive accounting of the most common ways homeowners can use to save their homes, either by staying in them and avoiding foreclosure, or by getting out of a bad situation with as much of their financial lives intact as possible. There are really no magical ways to end the foreclosure process — but there are enough tools that homeowners have available, that they can choose from a number of options to help them out of their hardship situations.

1. Save up and get current on the mortgage by paying back the payments you’ve missed, plus the interest, late fees, attorney fees, etc. Understand that there are often thousands of dollars of extra charges that are added once you start missing payments and especially if the lender hires a law firm to pursue the foreclosure.

2. Work with the lender to put together a repayment plan, which would require you to put down part of the amount you are behind now and pay back the rest over a period of months, along with you current monthly payment. Usually, repayment plans can be worked out through your lender’s loss mitigation department, and will result in you paying almost twice as much per month as your regular mortgage payment. This is to help you get caught up on the payments you missed while you are paying your original monthly obligation.

3. Work with the lender to modify the terms of the loan to say that the missed payments are spread out over the life of the loan or put on the back end of the loan. This is called a mortgage modification or loan modification. Some lenders will not do this because they do not hold the paper to be able to modify it. This is especially true for mortgage servicing companies, who only service their loans and collect payments, but who do not own the loans.

4. Refinance — find a hard money lender or traditional lender that will consider foreclosure refinance loans. Qualifications include lots of equity and lots of income, since your interest rate will probably be over 10%. Foreclosure refinance loans can be difficult to qualify for and may result in higher monthly payments, but they are a good way for homeowners to get a fresh start with a new note and new lender.

5. If you have an FHA loan, you can get a one-time loan from the FHA that will bring you current and is placed as a lien on the property that you would have to pay back if you sell or refinance the home. This is called a partial claim. You would have to contact the FHA directly for this one time payout to get you caught back up on your mortgage.

6. Sell to a private investor or friend/family member and lease/rent the property back from them. That clears off the foreclosure loan on the property and uses someone else’s good credit to get a new loan and allows you to stay in the property. Investors can also work out short sales on properties, allow they usually do this in the hope of flipping the property by reselling it quickly at a profit.

7. Bankruptcy will stop the foreclosure process, but is usually an expensive alternative to setting up a repayment plan, mentioned above. Attorney fees, trustee fees, court costs, and high monthly payments cause a lot of people to fail their bankruptcies. Only consider bankruptcy if you desperately want to prevent foreclosure and if you have a significant amount of income you can dedicate towards the bankruptcy payments.

8. Short sales are a good option if you owe more on the property than it is currently worth. A short sale means the bank accepts less than what they are actually owed, and would allow you to get out of the loan, at least. The bank would not be able to come after you for the rest of the loan amount, since, by accepting a lower amount, they forgive the rest of the debt owed on the mortgage.

9. Sell outright if the property is worth enough and you have a willing and able buyer. List the house yourself of through a local real estate broker. In some cases, it is the right decision just to unload the house to stop foreclosure and focus on repairing your credit until you can purchase a new, more affordable home in a few years.

10. If 1-9 do not work, you can offer the bank a deed in lieu of foreclosure, which means you’re voluntarily giving the property back to the bank and they are agreeing that the property is payment in full of the loan. This is not much better than a foreclosure, and you have to leave the property anyway, but it will prevent the sheriff sale and eviction process. The bank will not be able to ask for any extra money or sue you for a deficiency judgment, because they accept the property itself as satisfaction of the loan.

11. If 1-10 do not work, you can just move out and walk away and forget about the property. This is definitely not recommended if you care about your credit and plan to borrow money for several years, but foreclosure should teach you not to rely on banks to help you out when you face a hardship. All they really do is promise great deals when you think of going with them, and then throw you to the foreclosure dogs if you miss a payment. Many homeowners simply walk away because the foreclosure situation is so intimidating, but, as listed above, there are numerous options that are better than just giving up on the property.

Those are the most common options that can be used to stop foreclosure. There are a few others (suing your bank, etc.), but they involve much more cost and legal involvement and may not end up stopping the foreclosure process in the end.

Hope that helps.
ForeclosureFish

RPB answers:

The lender’s going to file a public notice of default by which you will be notified, and all other parties who have a lien or deed of trust on the property. The lender will then take ownership of the property with the intent to sell to cover the remaining principal portion of the loan.

RPB answers:

Your wife is free and clear from the bank foreclosure if she is not on the promissory note (part of the mortgage). By being listed on the mortgage and not on the promissory note she is simply acknowledging the lender as the first lien holder that super-cedes her own interest in the property.

RPB answers:

Okay – real answer: You’ve modified your loan and that brought it to current. Now you start the process over before it goes to Foreclosure: 30, 60, 90, 120 150 days past due, pre-foreclosure, foreclosure and eviction. It’s all investor driven.

You can possibly expedite by vacating the property, calling the servicer to let them know that you’ve moved out and left the keys somewhere on the property. They’ll go in and change the locks.

My curiosity is: Why aren’t you listing the property for sale? Why not get rid of it the right way as opposed to letting the investor eat the entire loss? You should be able to list it for fair market value. If you can get an offer at fair market value you can present to your investor and request a Short Sale. This would show as a ‘settlement’ on your credit vs. A foreclosure. The negative impact wouldn’t be nearly as great.

Also consider that if you let the property go to foreclosure and say it auctions off in November, is sold back to the lender and not a 3rd party – in January you will get a 1099 and have to claim the investor/bank loss as your income and pay taxes on all of it? You’re saying your loan is $315K? Can you really afford to pay taxes on that amount of money? At least with a short sale you would only be paying taxes on the difference.

You really need to look at all your options and not just the ‘easy’ one. If you let the property go not only will you have to pay taxes on it, your credit will be impacted by 200-300 points, your car insurance is likely to go up, when your credit card companies pull your FICO your interest is likely to go up. If you ever lose your job and the next job you apply for pulls your credit – it will be there for all to see. If you need a new car, you won’t be eligible. You won’t be able to buy another house for a minimum of 2 years unless you can come up with 20%+ down.

Again – I suggest you review all your options and think long term. Do not just do what you think it easiest because the reality is – it’s not as easy as you think.

RPB answers:

Depending on the lenders being on top of the matter. Since this is a domino effect the lenders plate is likely full. They can definately stay in that house 3 more months and maybe more. Since they haven’t recieved an official notice yet, I don’t think the process has even started.

RPB answers:

Of course they will pay.

If you wanted to pay $200,000 for a home you would offer $205,000 and ask that seller pay $5,000 in closing costs.

It is all the same to seller. They received a $200,000 offer. No one cares how it was structured.

The buyer’s lender will restrict the % of closing costs that can be paid by seller.

RPB answers:

A lot will depend on the contract, I have seen contracts that state all other offers to remain in back up positions. Another factor is what the lender does. By this I mean for who I work for, we only review one offer at a time. Short sales require a bunch of paper work and reviewing multiple offers can get confusing very quickly. Many buyers do tend to shy away from short sales as they can be very time consuming as one some of my deals we’ve needed 4 seperate approvals, ie first lender short sale approval, 2nd lender short sale approval, 3rd lender short sale approval and then the buyer’s lender approval. Throw in the volume for short sales and it can take 30-60 days just for some deals to be reviewed

RPB answers:

Yes, there is. Any real estate agent can get you a list of short sale houses, they are listed that way in the MLS. However, those are not going to be sold fast, short sales take a very long time because the bank has to get involved.

RPB answers:

In a short sale the bank does not own the house. The owner is attempting to get the bank to settle for a shortage on the mortgage payoff and still allow the buyer to get a clear title. The bank can change their mind even at the last minute just before closing (and sometimes do) because they are not a party to the contract and not obligated to anything. They only agree to this is #1 They believe they will be better off agreeing than foreclosing on the property. #2 They do not believe anyone is attempting to defraud them (by selling to a relative or something like that). They spend a lot of time investigating to see if this is the best price they think they can get, and who is really buying and they also investigate the original purchase to see if someone cheated them there.

It takes a very long time to hear if you will get this accepted or not. I believe most buyers are better off not considering a short sale.

RPB answers:

That mod will not help you at all. The 13 is designed to get you current in the end. What happens if the homes go up in the near future and when the 13 is done you could sell and break even? Have you thought about that at all? Prices will come back and yes even your credit score by the time the 13 is done you may well be able to refinance with an FHA secured note at that time with perfect pay history to the trustee.
I am a mortgage banker in TN

RPB answers:

Good copy paste and edit. The Dems are trying their best to fix this country. Show some support. Don’t be like the conservative un Americans who want to boycott GM and Chrysler.

RPB answers:

If you have a lawyer, why are you asking us?!?!?!?!?!

RPB answers:

Talk with your lender and try to settle in a short sale. If you can do a short sale the bank will forgive you on the negative balance. Also, if you can sell it before it gets foreclosed on, you’ll save your credit.