How to Avoid Foreclosure

Time is of the Essence - Don't let a foreclosure ruin your life and credit history.  If you are facing the unfortunate window of pre-foreclosure and can no longer afford to make payments on your home, or investment property, you are not alone and you may have options. 

WHAT OPTIONS DO YOU HAVE?

Immediately contact your loan servicer or bank in which you are making your mortgage payments to. Briefly explain your situation and ask about your available options.

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CONSIDER THESE POSSIBLE OPTIONS:  


Repayment Plan - A repayment plan lets you spread out your past due amount over several months being added to your current mortgage to bring it current.


Mortgage Relief - The Covid-19 pandemic has left millions of homeowners wondering how they will make their payments. The Biden-Harris Administration has made provisions to help millions of Americans with the American Rescue Plan Act 2021. You are encouraged to research and seek out assistance through COVID-19 Relief programs made available throughout the state.


Loan Modification - A loan modification is a change to the original terms of your mortgage loan and does not pay off your current mortgage. For example, the modification may include extending your loan term, modifying your interest rate, or changing your loan from adjustable to a fixed rate term.  


Forbearance - A mortgage forbearance allows borrowers to pause or lower their mortgage payments while dealing with a short-term crisis, such as a job loss, illness or other financial setback. This can help protect struggling borrowers from becoming delinquent with payments, as well as avoid foreclosure


Refinance - Refinancing is when a property owner gets a new mortgage loan to replace the current loan. Most people refinance in order to get a lower interest rate and lower mortgage payments. 


Deed in Lieu of Foreclosure - A deed in lieu of foreclosure is a mutual agreement between you and your mortgage lender where you agree to voluntarily turn over ownership to the lender. You essentially walk away from the home and you no longer make your mortgage loan payments.  


Short Sale -  A "short sale" simply means the homeowner's lender has given permission to the homeowner to sell the home for less than the remaining balance of the loan. To accomplish this, the seller must show the lender why they are in distress, such as job loss or illness, or that home values have fallen to the point that the seller doesn't have enough equity in the home to break even or sell at a profit. If the seller can show means to continue paying the note, it's unlikely the bank will grant a short sale, but if it appears the seller is about to default, the bank may agree to a short sale in order to minimize its losses. The terms of the short sale allow the seller to walk away from the mortgage while avoiding foreclosure, but the loss to the lender will be reflected in the seller's credit report, possibly delaying their ability to repurchase a home in the near future. At the least, the next lender will require more down or demand a higher interest rate.


Standard Sale - If you have exceeded all other options and can no longer afford to make your mortgage payments, then selling your home might be a resolution. If you decide to sell your home, it is important to work with a real estate professional who knows the process of working with your lender while your home is in pre-foreclosure/notice of default status. In a default situation, a standard sale is applicable to homeowners with equity greater than back payments owed.

What Happens In Foreclosure?


Foreclosure Proceedings - In terms of a homeowner defaulting on a mortgage, the bank begins foreclosure proceedings when the owner has missed payments; approximately 3 months depending on your lender’s guidelines. Prior to any foreclosure, the homeowner has several opportunities to stop the sale by paying the amount owed before the home goes to public auction. Be aware, after the property goes to auction, the homeowner loses all ability to retrieve the home. If the home does not sell at the auction, it goes back to the bank as an "REO" which stands for real estate owned. The home then becomes an asset holding of the bank. REOs are managed by asset managers who are employed or contracted by the bank. At some point during the process, you may be forced to move out. Foreclosure proceedings are quite serious, and you need an expert to help you navigate options.


How Long Can I Stay In the Property After the Foreclosure Auction? - Staying in the property after the Trustee Auction is not recommended. If the bank does not evict before the auction, the new owner must give you a 3-day notice telling you to move out. After the three days, an eviction proceeding will go through the courts, and you will be served a Summons and Complaint. Having the Sheriffs show up at your home and moving your personal belongings on the street is not something you want to experience. You should consult with a competent real estate attorney to explore your options if you are unable to move out.


What Happens If My Home Sell at the Auction for More Than My Balance? - If the property sells at the auction for more than the balance owed, you may be entitled to surplus funds, and should immediately communicate with the trustee or contact an attorney as soon as the auction takes place.


What Happens to My Credit After Foreclosure

A foreclosure may appear on your credit report within 30 to 90 days after foreclosure proceedings. The foreclosure may remain on your credit for approximately seven (7) years and this may interfere with the likelihood of obtaining other loans, or lines of credit and even the ability to qualify to rent a home. 


When it comes to foreclosures, TIME IS OF THE ESSENCE, and you need to act immediately. If you have received a notice of default, pre-foreclosure information or notifications regarding dates of an auction, you need to act immediately. Our experts are here to help relieve the burdens that come with foreclosures. 

Call Today! +1-310-684-3811

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