Facts, Fiction, and the Fantasy of Real Estate

If you are in foreclosure or about receive a notice of default (NOD) you should understand that the bank does not want to foreclose and take your home. As far as they are concerned, owning real estate is a liability that they do not wnat on their books. They become responsible for any other liens on title, paying taxes, maintaining the property, etc… which is why they hold auctions and often times sell the property at a loss. Once you understand and accept this it becomes obvious you are in a better position to negotiate then you might originally think.

The most common cause of foreclosure is failure to make payments. This can be for a number of reasons, which may or may not have a baring on your negotiations with the bank. Our point of conversation is the negotiations, not the events that have lead up to the foreclosure.

Here are some of the options you can get your lender to accept. When discussing your situation bring these to their attention and you may be able to strike a deal that will allow you to save your home. Before I continue, please understand that despite these options, most will affect your credit negatively, so refinancing may still be the course of action you decide to take. This will pull your home out of foreclosure the fastest and will settle the account quickly thereby improving your scores immediately.

If however, refinancing is not an option consider these:

Forbearance or Moratoriums – these partial or full payment waivers can provide you the necessary time to recover from whatever crises has caused the foreclosure. Keep in mind though, you will at some point in time need to make up the difference in payment which will cause extra money to be added to your regular payments once they resume.

Another option is a balloon payment for all the money accrued during the moratorium to be paid at the loan’s scheduled expiration date. This option will allow your current payments to continue without causing a burden of increased payment, but you will owe a significant amount of money at the end of the loan which will require you to save funds for this date, or sell your home for a higher price so you can afford to pay off the balloon amount.

Recasting… you can have the company recast the loan to lower the payments and stretch out the time period in which you must pay the full amount. This option however typically requires them to run a new title search to make sure their liem position is still secure. If you have other liens that could jeopardize their priority this option will not be available unless those liens are satisfied in full guaranteeing their first lien position.

If your situation is beyond negotiating, you may want to consider voluntary conveyance. Voluntary conveyance means you sign the property over to the bank without it going into foreclosure. Yes you lose your home, but you will save your credit, and move on with your life.

For more information, or you would like to discuss a particular situation feel free to comment.

peter@approved-online.com