Western Real Estate News

There are several options available to you to help you avoid the painful long-term repercussions of foreclosure. They all start with one thing: action. If you have received a notice of default or are behind in your mortgage payments, this article will tell you how to avoid foreclosure on your home. To avoid foreclosure, you may first attempt to negotiate one of the following options with your lender:

Loan Restructuring or modification (workout)

There are real estate companies that can negotiate with your lender’s loss mitigation department to get your loan in good standing again. There strategies you can use to get a restructure approved like a separate payment plan for your delinquencies or even adding the delinquency to the end of your loan. You may qualify for a modification, especially if you have recently experienced a reduction in income or an increase in living expenses. Sometimes it is even possible to get your monthly payment lowered.

Short sale

Real estate agents specializing in short sales can help you sell your home before a foreclosure sale takes place. In this scenario, the short sale specialist negotiates a short sale with your lender on your behalf. The lender would take less than you owe on the loan and they would avoid a costly foreclosure process. If the short sale is unsuccessful, an experienced real estate agent can arrange for you to simply give the property back to the lender and walk away not owing anything. This process is not as damaging to your credit report as a foreclosure would be.

There are steps you can take to avoid foreclosure that can be done on your own, without the assistance of a short sale real estate agent:

• Reinstatement
  Reinstatement of your loan by paying your lender all the past due amounts to bring the mortgage current. This option may not be feasible if your financial stress that caused the deliquency hasn’t improved.
• Mortgage Refinance
  You can refinance the debt or extend the term of your mortgage. However, this is a difficult option if you owe more then your property is worth. If you have already received a notice of default (NOD) then you most likely do not have the financial ability to refinance or do a loan reinstatement. Only as a last resort should you consider bankruptcy or allowing the bank to foreclose.
• Bankruptcy
  You may qualify for Chapter 7 Debt Elimination or Chapter 13 Reorganization. Bankruptcy stays on your credit for 10 years.
• Foreclosure
  This is the most damaging to your credit other than bankruptcy. The lender will be able to take your home and your equity. This will stay on your credit report for a total of seven years.

In these hard times, many homeowners are benefiting from the help of seasoned real estate agents who specialize in avoiding foreclosures. They routinely negotiate the above options and help their clients avoid foreclosure.

Tips to avoid foreclosure

Don’t ignore the problem

The further behind you become, the harder it will be to reinstate your loan and the more likely you will lose your home. Contact your lender as soon as you realize that you have a problem. Lenders prefer to be in the lending business, not the real estate business, so they do not want your house. They have options to help borrowers like you through difficult financial times.

Open and respond to mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later, mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure proceedings.

Know your rights as a borrower

Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and time frames in California, Click Here.

Keep track of your spending

After health care, keeping your home should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses – cable TV, memberships and entertainment that you can eliminate.

Contact a real estate company that specializes in loss mitigation

If you are unable to make you mortgage payment and are in jeopardy of losing your home, contact a reputable loss mitigation company to help you by negotiating with your lender to resolve your situation.

Documents you will need

This is a list of documents that are generally required for a loan resolution package, although this list can vary depending on each unique situation. These documents will generally be requested in order to process your loan modification package:

• Hardship Letter
  A letter that explains your unique situation as to why your cannot continue making your payments.
• Financial Statement
  This shows where your money goes and how much is left over after paying your bills. A short sale real estate agent will provide the appropriate forms, which will itemize your finances and show your hardship.
• Bank Statements
  Last two months of bank statements – checking, savings, etc.
• Mortgage Statements
  For all loans associated with the property.
• Most recent mortgage statement & account number
• Pay stubs
  Last two months of pay stubs, or proof of unemployment.
• Tax Returns
  Last two years of tax returns including W2′s.

Once all necessary documents are collected, the negotiation process can begin with your financial institution.

Where to go from here

• See if you qualify for a short sale
• Get a referral to short sale specialist near you