Seven Ways To Avoid Foreclosure

LIFE HAPPENS!  Through no fault of your own, you may be facing one of the greatest challenges of your life—how to prevent your property from being foreclosed upon.

Why let the bank take your most valued asset and leave you with nothing? For many years, our lawyers have helped people locate workable alternatives for this dilemma.  But don't wait until it's too late!  Look at our seven seven ways you can avoid foreclosure, and take action now!  Here they are:

1.      Refinance your mortgage with a new company

2.      Bring your existing mortgage current

3.      Create a “workout” with your current bank

4.       File for Bankruptcy Protection

5.      Create “shared equity”

6.      Transfer title

7.      Sell the property quickly

Here's what our lawyers say about each option—what it is, and the pros and cons of using each one:

1. Refinance

In today’s marketplace, there are many different types of financial institutions and individuals that lend money. Although you may not be able to refinance with your local bank due to your current situation, there are many mortgage companies and lenders who specialize in creative financing solutions.  That’s how they can compete with the big banks.  They may be able to review your situation and find a solution to your needs.

It is true that the loan you get will probably have a higher interest rate than a regular loan.  But if you have a good amount of equity in your property, the ability to refinance will most likely be a good option that’s available to you.

We would be happy to recommend one or more quality mortgage brokers who may be able to help you in your situation.

2. Bring your mortgage current

You must be thinking, “If I could bring my mortgage current, I wouldn’t be in this situation!” That may be true, but have you investigated every possible way that you may be able to get enough money to make up the missed payments and get back on track?

Can you borrow it from a friend, family member or co-worker? Can you sell something? Does your employer have any hardship loan programs?  Brainstorm with family members or close friends.  The more you think about it, the more likely it is that someone will remember or come across a solution.

Don't let pride get in the way of asking for help.  That's what friends and family are for!

3. File for Bankruptcy Protection

Filing a bankruptcy is viable alternative to letting your house go back to the bank in foreclosure, to being foreclosed upon.  The most common types of Bankruptcy are Chapter 7 and Chapter 13.  These refer to different parts of the bankruptcy law, and relate to whether you are somewhat in debt and need to renegotiate with lenders, or whether you truly are going to walk away from all your debts. 

The best option for avoiding foreclosure may be filing a Chapter 13 bankruptcy.  This will force your creditors to accept a repayment plan that you can afford.  You may also be able to include other debts in your repayment plan, such as car payments and credit card debt. But it's important to use this option only if you know you will be able to keep up with your future loan and bankruptcy payments. Otherwise you’re just postponing the inevitable, and the longer you wait, the less money you will walk away with from the

sale of your house. 

Believe it or not, a Chapter 7 Bankruptcy can actually improve your credit score because your credit report will show zero balances owed to your unsecured creditors, rather than the large amounts that you may currently owe. A Chapter 7 Bankruptcy will typically improve your debt-to-income-ratio, which is an important factor that many creditors consider when extending new credit. Although a bankruptcy can remain on your credit report for up to 10 years, most people resume normal credit activities immediately after receiving their discharge.

Feel free to Contact Us anytime to discuss your bankruptcy options.

4. Negotiate a Short Sale

In a "Short Sale" your mortgage lender would agree to take less than the amount you owe on your mortgages. This is usually your best option when you owe more than your home's current market value and you can no longer afford to make the payments. It prevents a foreclosure on your credit report and in most cases prevents you from any liability for payment on the difference between what you owe and what the house sells for. More good news, The Mortgage Debt Relief Act of 2007 generally saves you from the past IRS rules requiring you to claim the deficient amount on your income taxes. This can save you thousands of dollars and makes the Short Sale process an even more attractive solution. 

Click Here for more information on how a Short Sale might work for your situation. 

5. Create a workout with the lender

The lender does not want to foreclose. That’s because lenders are in the business of having their money at work in loans, and not sitting in a property they have taken back through foreclosure.  Not only is that a black mark on the lending institution, but it hurts their financial picture as well. 

Therefore, in many instances lenders are willing to do “workouts”. What this means is that they are willing to work out the back payments that are owed, until you become current again.

A typical workout would be the lender taking the full amount of your back payments and dividing that number by 12 or 24. They would then add that amount to your current payments, until you are paid off. 

When considering a workout, you’ve got to be able to make that extra payment each month or you will be right back where you started—in the foreclosure process for the second time.  At that point, the bank will not look very favorably upon your situation.

It’s best to work with a workout specialist…someone who has done workouts before and knows the “ins and outs” of the lending business.

We have investigated a number of companies who are specialists in this field, and have come up with two of the best that we can recommend:

6. Transfer title

This is a form of property sale, sometime called a “subject to” transaction. An investor offers to make up your back payments and take over your property, subject to the existing mortgage.

The title of the property goes into the buyer’s name, though the mortgage stays in your name until the loan is paid off. This could take as little as thirty days, or as long as three years.

You may ask, “How do I know the investor will make the payments?” The answer is quite simple: He has just made up all of your back payments; he now has a financial stake in the property. It only makes sense that he makes your payments to protect his investment.

This type of sale is becoming quite common. The benefits to you:

·          You don’t have a foreclosure on your record;

·          You may get some cash immediately to start fresh;

·          You immediately solve your looming foreclosure; and

·          Your credit gets built back up through no effort of your own, because the investor makes up your back payments and begins making your monthly mortgage payments on time every month.

Before long, your credit score is once again in good standing.

Click Here to find out a reputable Investor who may be able to take over your payments.

7. Sell your property quickly

Sometimes people just want to walk away from a bad situation, and leave everything that reminds them of that situation behind. In this case, you sell your property outright, collect any equity that you have in the property and start over again.

We know you have probably been going through a lot lately.  Loss of job, medical problems, loss of a loved one, or simply a spike in your interest rate that you can't handle. It may be time to face what is happening, and act in your best interest right now for a better tomorrow.

You can sell your property through a real estate agent or directly to an investor. Selling directly to an investor will save you the commission that you would pay to a real estate agent and more importantly will save you time.

A real estate agent sometimes takes three to six months to find you a buyer. If for some reason that buyer cannot get financing or close on the property, you might be left in a real bind.  A large percentage of real estate purchase contracts fail before they go to closing, often after months of holding up the sale.

The three to six months that a real estate agent may take to find a buyer could be longer than you can afford.  That’s because once your lender has set a date for the foreclosure, it will foreclose on that date, regardless of whether your buyer needs more time.

Our investor network has a reserve of cash ready to offer homeowners who are looking for a solution to their foreclosure problem.  Click Here to find out a reputable Investor to purchase your house.

If you’d like to discuss filing bankruptcy or various non-bankruptcy options to handle your debt and protect your property, please feel free to contact us any time.  We look forward to hearing from you.  We're used to dealing with people in difficult situations and do our best find the best solution.

828-262-9770

StephenBerndt@bellsouth.net