How do I save my house from foreclosure....
Do I have to lose my home to foreclosure? Maybe not. Everyone says not but not everyone believes it. The bank really doesn't want your house. Every time the bank takes back a house, they have to keep 4 times the amount of the loan in reserves which means if you owe $100,000 and the bank forecloses, they can't loan $400,000. Since the bank is in the business of loaning money and not owning real estate, they would rather work with you to keep your home.
OK, I'm behind, what are my options? It depends, if you got behind but are now able to make the payments, the bank or the company you make your payments to may help you do a few things:- They may let you put up a deposit and spread out what your behind over 18-36 months in addition to your regular payments. This is usually not a great option because it makes your payments a lot more money, something most people have a hard time paying.
- They may add what you owe onto the amount of your loan and recalculate your payment, which will raise your payment just a little. This is the best option if you are now able to make the payments on your house.
- If there are no liens on your property, you may offer to give the bank your house -- also known as a Deed In Lieu. Sometimes the bank will do this to avoid the costs in foreclosing.
- You can sell to someone for less than what you owe. This is called a short sale, when the bank will allow you to sell for less than you owe. The bank has to approve the offer. One important note is the bank will usually notify the IRS that they accepted less than the house was worth and the IRS will send you a tax bill for taxes owed, so you'll need to consult a financial advisor. If the bank knows you are trying to sell, they will sometimes give you additional time because you are making an effort, but every bank is different.
- Or you can let them foreclose. This sometimes your only option.
in addition to needing to let your house go to foreclosure, don't file bankruptcy. Its a double whammy on your credit.Does this mean I'll never be able to buy a house? No, it doesn't. After a bankruptcy, if you make payments on time between 1-2 years, you may be able to get a mortgage, even if its at a high rate. The same applies after a foreclosure. Then lender will take into consideration that you filed bankruptcy or had a foreclosure, but if you've keep your payments on time for the 2 years following, they will usually loan to you again.
Can I negotiate with the lender myself? Yes, you can but its not always easy to do. There are plenty of companies that will negotiate for you. If the lender or loan servicer sends a negotiator to you, there is usually no additional cost to you. If your lender doesn't reach out to you, you can either negotiate yourself or use someone who specializes in loss mitigation to help you. They usually charge a fee from a few hundred dollars to a few thousand. Sometimes its worth the money to have someone else negotiate for you.
Most importantly, unless you are truly selling your house, don't ever quit claim your property over to someone else or give them a deed. That just takes your name off the property but doesn't take your name off the loan -- the person who has the deed controls the property and can resell the house to someone else while you're still responsible for the mortgage. There are people advertising in the paper and on the web who want you to do this very thing. Only sell your house, open escrow, get fair payment and make sure your mortgage is paid off or lender notified in the process.
If you are having trouble with your mortgage payments and want to sell your house or have someone help you negotiate with your lender, drop me an email for some unbiased professional advice at HeatherRPeck@cox.net. I am a licensed Realtor and experienced Loss Mitigator having helped dozens of homeowners just like you.
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