Real Estate 2.0



Welcome to Real Estate 2.0:  Tips from HUD for Avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?  Do not ignore the letters and contact your lender immediately.  If you are unable to make your mortgage payment:

1. Don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.  Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all 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 court.

4. Know your mortgage rights.  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 your state (as every state is different) by contacting the State Government Housing Office.  

5. Understand foreclosure prevention options.  Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.

6. Contact a HUD-approved housing counselor.  The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide.  Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if needed.  Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.  After healthcare, keeping your house 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 television, memberships, entertainment - that you can eliminate.  Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets.  Do you have assets - a second car, jewelry, a whole life insurance policy - that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.  

9. Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help - use that money to pay the mortgage instead.  Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!  If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.




Loan Modification

If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable.  Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible. While only certain homeowners will be able to take advantage of this alternative, it may be your best option because it keeps you in your home and typically results in the least damage to your credit. A home loan modification is much like a mortgage refinance in that the objective is to find you a more affordable mortgage payment for your financial situation. In fact, it is often called a modified refinance. The primary difference is that instead of looking for a "new" loan you will just simply "modify" the terms of you existing mortgage. The U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure. 




SHORT SALES

A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property's loan.[1] It often occurs when a borrower cannot pay the mortgage loan on their property, but the lender decides that selling the property at a moderate loss is better than pressing the borrower. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the deficiency. If you are considering buying a short sale, there could be drawbacks. For your protection, we suggest that all borrowers obtain legal advice from a competent real estate lawyer and call an accountant to discuss short sale tax ramifications.




Foreclosure 

Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a court ordered termination of a mortgagor's equitable right of redemption. Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, the lender cannot be sure that it can successfully repossess the property, thus the lender seeks to foreclose the equitable right of redemption. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue homeowners' association dues or assessments. The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment. 




Foreclosure (Cash for Keys)

A "cash for keys" option is something your lender may offer after the foreclosure process is complete. If you have exhausted all of your options and saving your home is no longer possible, your lender may offer you a cash settlement to walk away from the home peacefully. Unless your lender offers this automatically, this is something that will need to be negotiated with them. In general, lenders will offer about 1% of your home's value if you are willing to walk away quickly and peacefully. Many homeowners report receiving these types of offers throughout the foreclosure process. However, depending on the circumstances, accepting a cash for keys offer should usually only be considered a last resort to stop foreclosure. The easiest and fastest way to receive help is to complete the evaluation form below and receive your free, customized e-book, which contains instructions and guidelines that can be used to stop foreclosure on your own.

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