Prayer About Mortgage Foreclosure

Foreclosure of Reverse Mortgages

With a reverse mortgage, older homeowners can use the equity in their home to get cash, but this is often a bad idea. Reverse mortgages are complicated, come with extensive restrictions and requirements, and—under certain circumstances—can be foreclosed. (To learn the upsides and downsides to reverse mortgages, see Is a reverse mortgage or home equity loan better for me?)

Read on to learn more about reverse mortgages and when the lender can foreclose.

Understanding Mortgages

Significant differences exist between traditional mortgages and reverse mortgages.

Traditional Mortgages

With a traditional, forward mortgage, the borrower qualifies for and borrows a large sum of money factors such as income, job history, and creditworthiness.

Often, a traditional mortgage loan is taken out to purchase real estate. The borrower then has to repay the loan by making monthly installment payments. If the borrower stops making payments, the lender can foreclose.

(Learn the basics about foreclosures and foreclosure procedures.)

Reverse Mortgages

Reverse mortgages, on the other hand, are designed to allow elderly homeowners to convert the equity in their homes to income or a line of credit. Reverse mortgages are only available for homeowners who:

• are age 62 or over
• occupy the property as a principal residence, and
• own the home outright or have significant equity in the home.

The Federal Housing Administration (FHA) insures almost all reverse mortgages through its Home Equity Conversion Mortgage (HECM) program. The insurance guarantees lenders that they will be repaid in full when the home is sold.

Other types of reverse mortgages exist too—they're called proprietary reverse mortgages—which are private loans backed by the companies that develop them.

A reverse mortgage is different from a traditional mortgage in that it doesn't require the borrower to make monthly payments to the lender to repay the loan. Instead, loan proceeds are paid out to the borrower according to a plan. The borrower can choose to receive a:

• monthly payment
• line of credit, or
• lump sum (though with a HECM, you're limited to 60% of the loan amount during the first year after closing in most cases).

You can also get a combination of monthly payments and a line of credit.

When Does a Reverse Mortgage Become Due and Payable?

Once a triggering event occurs, the reverse mortgage loan becomes due and payable. This means that the borrower owes the lender the total amount of money the lender has disbursed to the borrower, plus interest and fees accrued during the life of the loan.

Triggering Events

A HECM reverse mortgage loan becomes due and payable when one of the following circumstances occurs.

All borrowers have died. When this happens, the heirs have several options. They may choose to:

• repay the loan and keep the property (generally, with a HECM, the heirs may pay the lesser of the mortgage balance or 95% of the current appraised value of the home)
• sell the property (for at least the lesser of the loan balance or 95% of the fair market value of the home in the case of a HECM) and use the proceeds to repay the loan
• deed the property to the lender, or
• let the lender foreclose.

If you take out a HECM and have a nonborrowing spouse, your spouse might be able to remain in the home after you die, and the loan repayment deferred, so long as certain criteria is met. The rules are complex and different depending on whether you took the loan out before or after August 4, 2014. (Learn more in Reverse Mortgages: Foreclosure Protections for Nonborrowing Spouses.)

The property is sold or title to the property is transferred. If the home is sold or title transferred, the loan becomes due and payable.

Generally, if the property is sold, the escrow company will accept the purchaser’s money and pay off the reverse mortgage along with any other liens on the property.

If you transfer ownership of the home—for example to a relative—the loan becomes due and payable.

The borrower no longer uses the home as a principal residence.

With a HECM, if the property ceases to be the principal residence of the borrower for reasons other than death and the property is not the principal residence of at least one other borrower, the loan becomes due and payable.

To resolve the debt, you can correct the matter, pay the balance in full, sell the home for the lesser of the balance or 95% of the appraised value and put the proceeds toward paying off the loan, or complete a deed in lieu of foreclosure. Or else, the lender will foreclose.

The borrower fails to occupy the home for longer than 12 consecutive months because of a physical or mental illness.

With a HECM, the borrower can be away from the home—for example, in a nursing home facility—for up to 12 consecutive months due to physical or mental illness; however, if the absence is longer, and the property is not the principal residence of at least one other borrower, then the loan becomes due and payable.

Again, to resolve the debt, you can correct the matter, pay the balance in full, sell the home for the lesser of the balance or 95% of the appraised value and put the proceeds toward paying off the loan, or complete a deed in lieu of foreclosure. Otherwise, the lender will foreclose.

The borrower fails to meet the obligations of the mortgage. The terms of the mortgage will require the borrower to pay the property taxes, maintain adequate homeowners’ insurance, and keep the property in good condition.

(In some cases, the lender might create a set-aside account for taxes and insurance.) If the borrower doesn't pay the property taxes or homeowners' insurance, or if the property is in disrepair, this constitutes a violation of the mortgage and the lender can call the loan due.

The lender must usually allow the borrower to cure the default to prevent or stop a foreclosure.

No Deficiency Judgments

When a lender forecloses, the total debt that the borrower owes to the lender sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a “deficiency.”

Example. Say the total debt owed is $200,000, but the home sells for $150,000 at the foreclosure sale. The deficiency is $50,000.

In some states, the lender can seek a personal judgment against the borrower—or the borrower’s estate—to recover the deficiency after a foreclosure. However, deficiency judgments are not allowed with HECM reverse mortgages.

For More Information

Reverse mortgages are complex and, even after attending a required counseling session before getting one, many borrowers still don’t completely understand all the terms and requirements of this kind of loan. For more information about reverse mortgages, go to www.aarp.org/revmort.

To learn more about the HECM reverse mortgage program, go to www.hud.gov and enter “HECM” in the home page search box to find a long list of relevant links.

You should also consider talking to a trusted financial planner or elder-law attorney or estate planning attorney before taking out this type of mortgage.

Источник: //www.nolo.com/legal-encyclopedia/foreclosure-reverse-mortgages.html

CFPB Rules Establish Strong Protections for Homeowners Facing Foreclosure | Consumer Financial Protection Bureau

New Rules Prevent Servicer Surprises and Runarounds for Mortgage Borrowers

WASHINGTON, D.C. — Today the Consumer Financial Protection Bureau (CFPB) issued rules to establish new, strong protections for struggling homeowners facing foreclosure. The rules also protect mortgage borrowers from costly surprises and runarounds by their servicers.

“For many borrowers, dealing with mortgage servicers has meant unwelcome surprises and constantly getting the runaround. In too many cases, it has led to unnecessary foreclosures,” said CFPB Director Richard Cordray. “Our rules ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.”

Mortgage servicers are responsible for collecting payments from mortgage borrowers on behalf of loan owners.

They also typically handle customer service, escrow accounts, collections, loan modifications, and foreclosures. Generally, borrowers have no say in choosing their mortgage servicers.

Lenders frequently sell loans to investors after the mortgage deal is signed, and the investors, not the consumers, often choose the servicers.

Even before the financial crisis, the mortgage servicing industry at times experienced problems with bad practices and sloppy recordkeeping. As millions of borrowers fell behind on their loans as a result of the crisis, many servicers were unable to provide the level of service necessary to meet homeowners’ needs.

Many simply had not made the investments in resources and infrastructure to service large numbers of delinquent loans. Consumers complained about getting the runaround and being hit with costly surprises.

Now, with millions of homeowners in distress, many borrowers are continuing to experience serious problems seeking loan modifications or other alternatives to avoid foreclosure.

Strong Protections for Struggling Borrowers

The CFPB’s mortgage servicing rules ensure that borrowers in trouble get a fair process to avoid foreclosure. Borrowers shouldn’t have to worry about mortgage servicers cutting corners or losing applications for relief.

They should be told about their options and given time to apply and be considered for loan modifications and other alternatives. Most of all, they shouldn’t be surprised by the start of a foreclosure proceeding until they have had time to explore all available options.

If they act diligently to seek alternatives, they should not face a foreclosure sale before their applications have been evaluated. The new protections for struggling borrowers include:

• Restricted Dual-Tracking: Under the CFPB’s new rules, dual-tracking – when the servicer moves forward with foreclosure while simultaneously working with the borrower to avoid foreclosure – is restricted. Servicers cannot start a foreclosure proceeding if a borrower has already submitted a complete application for a loan modification or other alternative to foreclosure, and that application is still pending review. To give borrowers reasonable time to submit such applications, servicers cannot make the first notice or filing required for the foreclosure process until a mortgage loan account is more than 120 days delinquent.
• Notification of Foreclosure Alternatives: Servicers must let borrowers know about their “loss mitigation options” to retain their home after borrowers have missed two consecutive payments. They must provide them a written notice that includes examples of options that might be available to them as alternatives to foreclosure and instructions for how to obtain more information.
• Direct and Ongoing Access to Servicing Personnel: Servicers must have policies and procedures in place to provide delinquent borrowers with direct, easy, ongoing access to employees responsible for helping them. These personnel are responsible for alerting borrowers to any missing information on their applications, telling borrowers about the status of any loss mitigation application, and making sure documents get to the right servicing personnel for processing.
• Fair Review Process: The servicer must consider all foreclosure alternatives available from the mortgage owners or investors – those with decision-making power over the loan – to help the borrower retain the home. These options can range from deferment of payments to loan modifications. And servicers can no longer steer borrowers to those options that are most financially favorable for the servicer.
• No Foreclosure Sale Until All Other Alternatives Considered: Servicers must consider and respond to a borrower’s application for a loan modification if it arrives at least 37 days before a scheduled foreclosure sale. If the servicer offers an alternative to foreclosure, they must give the borrower time to accept the offer before moving for foreclosure judgment or conducting a foreclosure sale. Servicers cannot foreclose on a property if the borrower and servicer have come to a loss mitigation agreement, unless the borrower fails to perform under that agreement.

No Surprises

Mortgage borrowers should not be surprised about where their money is going, when interest rates adjust, or when they get charged fees. The CFPB’s rules help every borrower, whether struggling or not, by bringing greater transparency to the market with clear and timely information about mortgages. These rules include:

• Clear Monthly Mortgage Statements: Servicers must provide regular statements which include: the amount and due date of the next payment; a breakdown of payments by principal, interest, fees, and escrow; and recent transaction activity.
• Early Warning Before Interest Rate Adjusts: Servicers must provide a disclosure before the first time the interest rate adjusts for most adjustable-rate mortgages. And they must provide disclosures before interest rate adjustments that result in a different payment amount.
• Options for Avoiding Costly “Force-Placed” Insurance: Servicers typically must make sure borrowers maintain property insurance and if the borrower does not, the servicer generally has the right to purchase it. The CFPB’s rules ensure consumers will not be surprised by this insurance, which often can be more expensive than the insurance borrowers buy on their own. The rules say servicers must provide more transparency in this process, including advance notice and pricing information before charging consumers. Servicers must also have a reasonable basis for concluding that a borrower lacks such insurance before purchasing a new policy. If servicers buy the insurance but receive evidence that it was not needed, they must terminate it within fifteen days and refund the premiums.

No Runarounds

When mortgage servicers make mistakes, records get lost, payments are processed too slowly, or servicer personnel do not have the latest information about a consumer’s account, the consumer suffers the consequences. The CFPB’s rules will require common-sense policies and procedures for handling consumer accounts and preventing runarounds. These rules include:

• Payments Promptly Credited: Servicers must credit a consumer’s account the date a payment is received. If the servicer places partial payments in a “suspense account,” once the amount in such an account equals a full payment, the servicer must credit it to the borrower’s account.
• Prompt Response to Requests for Payoff Balances: Servicers must generally provide a response to consumer requests for the payoff balances of their mortgage loans within seven business days of receiving a written request.
• Errors Corrected and Information Provided Quickly: Servicers must generally acknowledge receipt of written notices from consumers regarding certain errors or requesting information about their mortgage loans. Generally, within 30 days, the servicer must: correct the error and provide the information requested; conduct a reasonable investigation and inform the borrower why the error did not occur; or inform the borrower that the information requested is unavailable.
• Maintain Accurate and Accessible Documents and Information: Servicers must store borrower information in a way that allows it to be easily accessible. Servicers must also have policies and procedures in place to ensure that they can provide timely and accurate information to borrowers, investors, and in any foreclosure proceeding, the courts.

Today’s rules originate from the Dodd-Frank Wall Street Reform and Consumer Protection Act, which directed the CFPB to implement reforms for the mortgage servicing industry.

The CFPB announced in August that it was considering a number of proposals to implement the Dodd-Frank Act requirements and address systemic problems in the industry.

Today’s rules are a result of the public’s feedback on those proposals.

Recognizing that small servicers approach servicing quite differently, the CFPB made certain exemptions to today’s mortgage servicing rules for small servicers that service 5,000 or fewer mortgage loans that they or an affiliate either own or originated. These servicers are mostly community banks and credit unions servicing mortgages for their customers or members.

The mortgage servicing rules take effect in January 2014. The CFPB plans to work with mortgage servicers to ensure an easy transition to implementation.

To help with compliance, the CFPB will, among other things, be issuing plain language implementation guides and, in coordination with other agencies, releasing materials that help servicers understand supervisory expectations.

For many of the new rules that require specific notifications, the rule contains model and sample forms. As the effective date approaches, the CFPB will also give consumers information about their new rights under these rules.

The mortgage servicing rules can be found Thursday at:www.consumerfinance.gov/regulations

A factsheet about the rules can be found at: //files.consumerfinance.gov/f/201301_cfpb_servicing-fact-sheet.pdf

Источник: //www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-rules-establish-strong-protections-for-homeowners-facing-foreclosure/

Foreclosure? Mortgage insurer may help

When homeowners fall behind on their house payments, they occasionally get help from an unexpected source: the mortgage insurer.

Mortgage insurance companies have their own loss-mitigation departments, where employees try to reduce foreclosures. Most mortgage insurers employ people who work directly with borrowers over the phone, negotiating loan modifications or repayment plans.

Lenders, and their mortgage-servicing arms, have loss-mitigation departments, too. But borrowers find it hard to discern the difference between the servicers’ bill collectors and their loan-workout negotiators.

Conversations with bill collectors are stressful, so a lot of delinquent borrowers stop answering phone calls and letters from their servicers.

Borrowers sometimes are more receptive to mortgage insurers, who don’t call seeking immediate payment.

In a foreclosure, the mortgage insurer reimburses the servicer and investor for their losses. This means that mortgage insurers are motivated to negotiate workouts with borrowers who have fallen behind on their payments.

Alan Goldberg, vice president of homeowner assistance for mortgage insurer Genworth, explains the process:

“The servicer is required to do workouts, and they’re pretty good at it,” he says. “They do their normal contacts with the borrower, and most workouts get done that way.”

But some don’t. Each month, the mortgage insurance companies get lists of insured loans that are delinquent. “From that group of borrowers we can select a group of people we would to contact,” Goldberg says. “We attempt to contact them for 60 days.

We send them a letter first explaining who we are — some are familiar with Genworth, some are not — and we explain that we’re their mortgage insurance company, that we have an interest in their loan, and that the servicer has advised us that they’re having trouble paying their bill, and that we’re here to help them.”

The letter contains a brochure with a link to the company’s Web site as well as a phone number to call the loss-mitigation department.

“About five or six days after we send them that letter, if we haven’t heard from them, then we start to attempt to call them,” Goldberg says.

“We explain who we are, obviously there are no fees at all — they’re included when they bought their mortgage insurance.”

In addition, the borrower fills out a hardship letter.

“It basically says: ‘What is the problem? Why you can’t pay this? Did you have medical issues? Did you get laid off from your job? What is the situation that’s causing you to have this hardship?'”

The information is entered into a computer that analyzes the borrower’s financial situation and recommends workout scenarios — payment plans, modifications or refinances.

A loan workout can proceed only if the servicer, investor and mortgage insurance company approve it unanimously. Mortgage insurers have a good idea of what is and what isn’t acceptable to servicers and investors. “The servicer, if they’re in concurrence, would contact the borrower and actually do the closing on the workout. That’s basically the process,” Goldberg says.

Spokespeople for other mortgage insurers, such as AIG United Guaranty, MGIC, PMI Group and Radian, say that their processes are similar. But not identical: PMI Group and Radian don’t negotiate with borrowers directly.

Instead, they outsource that work to nonprofit credit counseling agencies.

Most insurers “embed” workout specialists inside the loss-mitigation offices of large mortgage servicers to speed up negotiations and fast-track workout approvals.

A mortgage insurance company gives the delinquent borrower someone else to negotiate a workout with.

But few homeowners can take advantage because most borrowers avoided mortgage insurance during the housing boom and instead got piggyback loans.

According to Inside Mortgage Finance, about $9 trillion in mortgages was originated in 2004, 2005 and 2006, and mortgage insurance backed up about $798 billion of that — only 8.9 percent.

Incentive to foreclose

There’s an ironic twist associated with mortgage insurance: It sometimes gives servicers the incentive to foreclose on a property instead of negotiating a loan workout. It can be more profitable for the servicer to foreclose, collect the mortgage insurance claim and be done with a pesky borrower.

There are two fixes to the perverse incentive to foreclose on an insured loan instead of modifying it. One fix applies to loans owned by Fannie Mae and Freddie Mac. The federal government requires servicers to modify loans owned by Fannie or Freddie when possible under the Home Affordable Modification program, even if foreclosure would be less unprofitable.

The other fix applies to loans that aren’t owned by Fannie or Freddie. The mortgage insurance industry has instituted a “Second Look” program, under which servicers promise to give mortgage insurers a crack at modifying a loan before starting foreclosure.

Partial claims

Mortgage insurers can pay “partial claims” to reimburse servicers for borrowers’ late fees or unpaid interest, or even to reduce the amount of principal owed.

For example, if a mortgage insurer is on the hook to pay up to $50,000 to the servicer in the event of foreclosure, the insurer might pay a partial claim of up to $7,500 to get the loan current again and give the borrower a second chance.

Melchiorre adds that foreclosure can’t be prevented if borrowers ignore letters and calls from servicers and mortgage insurers. “At the end of the day, if you don’t have a cooperative borrower …,” he says, letting the incomplete sentence hang there. “One of the problems is that we need to articulate the number of failures because of lack of borrower cooperation.”

You may also

Источник: //www.bankrate.com/finance/mortgages/foreclosure-mortgage-insurer-may-help.aspx

What Is Foreclosure? – Foreclosure Center

Foreclosure is what happens when a homeowner fails to pay the mortgage.

More specifically, it’s a legal process by which the owner forfeits all rights to the property. If the owner can’t pay off the outstanding debt, or sell the property via short sale, the property then goes to a foreclosure auction. If the property doesn’t sell there, the lending institution takes possession of it.

To understand foreclosure, it helps to keep in mind that the word “homeowner” in this case is actually a misnomer. “Borrower” is a more apt term. That’s what a mortgage, or deed of trust, is: a loan agreement for the purchase price of the home, minus the down payment. This document puts a lien on the purchased property, making the loan a “secured loan.”

When a lender loans you money without any collateral (credit card debt, for instance), it can take you to court for failure to pay, but it can be very hard to collect money from you. Lenders often sell this sort of debt to outside collection agencies for pennies on the dollar and write off the loss. This is considered an “unsecured loan.”

A secured loan is different because, although the lender may take a loss on the loan if you default, it will recover a larger portion of the debt by seizing and selling your property.

So what happens in a foreclosure? The specifics can vary according to state law, but we can break it down into five stages.

Stage 1: Missed payments

It all starts when the homeowner — the borrower — fails to make timely mortgage payments. Usually, it’s because they can’t, due to hardships such as unemployment, divorce, death or medical challenges.

If you’re in this tough situation, it’s essential that you talk to your lender as soon as possible. There are several options to help keep you in your home. The foreclosure process costs the lender a lot of money, and they want to avoid it just as much as you do.

Sometimes, a borrower may intentionally stop paying the mortgage because the property might be underwater (in other words, the amount of the mortgage exceeds the value of the home) or because he’s tired of managing the property.

Whatever the reason, the bottom line is that the borrower can’t or won’t meet the terms of the loan.

Stage 2: Public notice

After three to six months of missed payments, the lender records a public notice with the County Recorder’s Office, indicating the borrower has defaulted on the mortgage. In some states, this is called a Notice of Default (NOD); in others, it’s a lis pendens — Latin for “suit pending.”

Depending on state law, the lender might be required to post the notice on the front door of the property. This official notice is intended to make borrowers aware they are in danger of losing all rights to the property and may be evicted from the premises. In other words, they’re in danger of foreclosure.

Stage 3: Pre-foreclosure

After receiving a NOD from the lender, the borrower enters a grace period known as pre-foreclosure. During this time — anywhere from 30 to 120 days, depending on local regulations — the borrower can work out an arrangement with the lender via a short sale or pay the outstanding amount owed.

If the borrower pays off the default during this phase, foreclosure ends and the borrower avoids home eviction and sale. If the default is not paid off, foreclosure continues.

Stage 4: Auction

If the default is not remedied by the prescribed deadline, the lender or its representative (referred to as the trustee) sets a date for the home to be sold at a foreclosure auction (sometimes referred to as a Trustee Sale).

The Notice of Trustee’s Sale (NTS) is recorded with the County Recorder’s Office with notifications delivered to the borrower, posted on the property and printed in the newspaper.

Auctions can be held on the steps of the county courthouse, in the trustee’s office, at a convention center across the country, and even at the property in foreclosure.

At the auction, the home is sold to the highest bidder for cash payment. Because the pool of buyers who can afford to pay cash on the spot for a house is limited, many lenders make an agreement with the borrower (called a deed in lieu of foreclosure) to take the property back. Or, the bank buys it back at the auction.

Stage 5: Post-foreclosure

If a third party does not purchase the property at the foreclosure auction, the lender takes ownership of it and it becomes what is known as a bank-owned property or REO (real estate owned).

Bank-owned properties are sold in one of two ways. Most often, they are listed by a local real estate agent for sale on the open market. Zillow lists bank-owned properties for sale. Also, some lenders prefer to sell their bank-owned properties at a liquidation auction, often held in auction houses or at convention centers.

Previous Article

Источник: //www.zillow.com/foreclosures/overview/what-is-a-foreclosure/

How to Keep Your Home and Avoid Foreclosure

If you fail to make your mortgage payments each month, your bank or mortgage lender may take action to repossess your home.

After all, it’s not technically your home until you’ve paid the mortgage in full.  Until that time, you AND the bank own the home.  So if you don’t hold up your end of the bargain, the bank could come knocking.  And the news won’t be good!

The legal proceeding is known as a “foreclosure,” and will result in the loss of your home, foreclosure fees, additional legal fees, and possibly a deficiency judgment if your outstanding liens exceed the current value of your home.  Your credit will also be shot when all is said and done.

The foreclosure process usually goes something this:

• Become ill or lose your job (or mortgage adjusts significantly higher)
• Fall behind on monthly payments
• Once you’ve missed 3 mortgage payments lenders can file NOD
• And begin foreclosure proceedings
• At any point you can try to save your home in a number of ways

You lose your job, become ill, or simply fall behind on your mortgage payments after your adjustable-rate mortgage resets. Unfortunately, these aren’t typically valid reasons to miss your mortgage payment(s).

When you originally applied for your mortgage, you probably verified asset reserves to prove to the bank that you could afford to pay the loan for a certain period of time, even if you failed to receive additional income for some period of time.

Once you miss your first payment, the bank or lender will hit you with a 30-day late. At this point your credit will take a huge hit (how long does a foreclosure stay on your credit), and a representative from the bank or lender may call you, or send you a notice in the mail regarding your failure to pay on time.

It Shouldn’t Come as a Complete Surprise

• Along the way you’ll be notified of late payments
• And potentially offered a forbearance plan
• Which allows you to get your account back in good standing
• If you ignore the warnings you could eventually lose your home

The bank or your loan servicer may also discuss a forbearance plan with you to resolve the missed payment and get you back on track. This is basically a special payment plan the bank/servicer sets up with the borrower to either lower payments or suspend payments so you can continue paying your mortgage.

Alternatively, there’s the possibility you could take advantage of a special refinancing or loan modification program to make your payments more affordable going forward. But you will still need to prove to them that you’ll be able to handle the new financing terms.

If you fail to speak with your lender/servicer, and continue to miss mortgage payments, you will be hit with a 60-day late, followed by a 90-day late.  That will impact your credit pretty significantly, and any chances of refinancing or seeking a forbearance plan may be lost.

Once you hit the 90-day late mark, the bank or lender will send a Notice of Default. The NOD essentially states that you have 30 days to make the payment current, appear in court, or face the risk of a foreclosure. If 30 days go by and you fail to appear in court or make your payments current, the court can schedule an auction to sell your home within 7 days.

If the auction ends without a buyer, the bank or lender will gain ownership and ly perform maintenance on the property, clear up any title issues, then put it on the market.

After paying legal fees, foreclosure fees, late fees, and losing your home, you’ll be hit with a huge ding on your credit report. A foreclosure will drop your credit score dramatically and prevent you from borrowing from A-paper banks for many years to come.

There Are Various Ways to Stop a Foreclosure

• The are plenty of ways to stop foreclosure
• But you have to be proactive and resourceful
• If your lender or loan servicer won’t help you
• Consider speaking with a HUD approved housing counselor
• Or contact state housing finance agency

The scenario above is just one way late mortgage payments can end in foreclosure.  Luckily, there are a number of ways you can stop foreclosure, though not all of them will allow you to keep your home. They include:

– Refinance – Forbearance Plan – Partial Claim – Pre-Foreclosure Sale (also known as a short sale)

– Deed in Lieu of Foreclosure

– Loan Modification
– Short Refinance
– Short Sale

As I mentioned above, a refinance may lower your payments and get you back on track. But you will need to qualify and exhibit the ability to make the payments. Some borrowers were able to take advantage of the Home Affordable Refinance Program (HARP) despite having underwater mortgages, but it required borrowers to be current on their home loans.

Your bank may also be able to save you from foreclosure by putting you on an interest-only home loan or a shorter-term ARM to lower the monthly mortgage costs.  Ironically, these will reset in the future and could land you back in a tough spot.  However, it would buy you some time to get back on your feet.

A partial claim allows the mortgagee to advance funds to the mortgagor (the borrower) in the form of a promissory note.

So long as you are not delinquent over 12 months, HUD may grant you a partial claim (for FHA loans), which will bring your mortgage payments current.

It is essentially a second mortgage behind your existing lien that collects no interest, and is not due until you pay off your first mortgage or sell your home.

A pre-foreclosure sale, such as a short sale, will help you avoid a foreclosure, but unfortunately at the cost of selling your home, ly for much less than it’s worth.  It will also ding your credit in the process. But it could lessen the blow, and help you avoid any deficiency judgments after the fact.

Another option is a deed in lieu of foreclosure, which allows you to sell your home back to the bank that financed your mortgage. It is a great way to avoid foreclosure proceedings, but again results in the loss of your home.

It must be voluntary, and both parties must act in good faith. The bank/lender must buy the property for at least fair market value, but will usually not proceed if that value exceeds the existing liens.

Ultimately, you really have to hustle and exhaust all options if you’re serious about saving your home and avoiding foreclosure. No one said it was easy, nor is there a one-size-fits-all solution. So expect a long and hard journey.

Speak with an Independent Housing Counselor

• A legitimate housing counselor
• Such as a HUD approved or state housing finance agency employee
• Can provide assistance to help you prevent an avoidable foreclosure
• They should never ask you to pay any fees for their services

You can also contact a local HUD approved counselor for help in foreclosure matters. Click the following link for a list of HUD Approved Housing Counseling Agencies.

Or look into non-profit programs and services offered by your state housing finance agency. For example, in my home state of California there is an organization called “Keep Your Home California,” which is a federally-funded free service for struggling homeowners who need help staying in their homes.

They work with a large number of loan servicers to achieve affordable mortgage payments and help homeowners avoid foreclosure. There are similar agencies in every state throughout the nation, so be sure to consider that route as well.

Just make sure they are the official housing agencies backed by the state or the United States Department of the Treasury. These government-backed agencies will never request that you pay fees for assistance, which is a good indication you’re working with the right type of organization.

One final thing to note is that despite all the available, regulated, and honest means available for saving your home from foreclosure, many foreclosure scams are also prevalent.

These scam artists will do their best to contact you during pre-foreclosure to rip you off using a variety of tactics including bait and switch schemes, equity skimming, fake bailouts, and overpriced help that leads nowhere. So always do your due diligence when seeking foreclosure help to avoid making matters even worse.

How Do Foreclosures Affect Property Values in Your Neighborhood?

• They say for each foreclosure that occurs
• Nearby property values will drop about 1.5%
• If multiple foreclosures take place in a small area
• The impact can be even greater

Many real estate professionals note that for every foreclosure that occurs within a neighborhood, the value of the homes around it drop by about 1.5%.

While typically not very significant as foreclosures occur somewhat infrequently, if multiple foreclosures occur within one neighborhood in a short period of time, a crippling value drop can take place.

Imagine the areas suffering the most from the recent housing bust, such as the inland Central Valley of California or Las Vegas, Nevada.

To accommodate the builders, banks and mortgage lenders nationwide created aggressive mortgage programs to get new homeowners into these new developments, often pitching 1% option-arms and other high-risk loans.

But once the housing boom had gone bust and most of these loans had lost their initial low mortgage payments, many of these unwitting homeowners were forced to sell or face foreclosure.

And because multiple foreclosures took place in these areas, a large drop in home prices exacerbated an already bad situation.

This is yet another reason why location is so important in real estate – many metropolitan areas in the United States such as Los Angeles and New York City are saturated, and new development is rare because it’s cumbersome and riddled with bureaucratic red tape.

Such areas will ly retain much of their value through a crisis as there will always be buyers, and limited inventory means it won’t be able to get too control.

Read more: How long after foreclosure can I purchase a home?

Источник: //www.thetruthaboutmortgage.com/foreclosure-help/