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Unfortunately, there 1. Do You NEED To Move - Many people think that if they are facing a foreclosure they need to sell as soon as possible. However, especially in today's market, do you really need to sell? Or are you just selling to avoid foreclosure? Good reasons to sell: Family Grew, Divorce, job relocated, too much house to make the payment. If you don't HAVE to sell read the steps below. If you must sell skip to step 7. 2. Don't Avoid Your Lender - Probably the biggest mistake most borrowers make is to avoid their lender. As humans we don't want to acknowledge the fact that we have a problem. The easiest way to do that? Don't answer the phone, throw away the notices, etc. However, contrary to popular belief, MOST lenders want to work with you to create a situation that works to avoid foreclosure. 3. Be Proactive - If you know you are going to have a problem paying your mortgage soon, pick up the phone, call your lender! Ask to speak to their loss mitigation department. Most people are shocked to hear that if you can show your lender you won't be able to make your payments, they'll do what's called a loan modification. (What is a Loan Modification - the lender changes the interest rate or the amortization period of the loan to make it more suitable to the borrower.) If you are worried about the implications of calling your lender directly you can call a Government Run operation known as the Hope Now Alliance. This organization is a centralized system for working with borrowers facing trouble, you can reach them at 1.888.995.HOPE 4. Have Documents Ready - When you call your lender or HOPE NOW, have together your last 2 paycheck stubs, a bank account statement, a fairly good estimate of your monthly expenses, and any non retirement assets you have. If the lender requires you to fax them documentation, send along what's called a hardship letter. A hardship letter is a personal note explaining the situation of why you are in the trouble you are. For example, you might be going through a divorce, added a member to your household, lost a job, etc. You'll want to explain what happened in detail, one paragraph is not sufficient. 5. Know What You Can Afford - Be honest, let them know what you can reasonably afford. Defend why you can only afford this suggested new payment. (Keep in mind, having a large luxury car payment or extraordinary dining out budget are not good excuses). 6. Know Your Options - For many people facing foreclosure, a loan modification is best, but sometimes loan forbearance will work.(Loan Forbearance - an agreement between the lender and borrower to delay foreclosure to allow the borrower to repay a back amount owed by a certain date.) If none of this will work, and the home is still more than you can afford, ask about 7. Utilize A Short Sale - A short sale is the process by which the bank allows a homeowner to sell a property for below the amount they currently owe on the property. Click Here for more detailed information 8. Utilize the new FHA Secure Program - Although this might not help every family facing foreclosure, HUD has launched a new FHA loan called FHA Secure designed to help refinance borrowers facing a rate increase and potential foreclosure. Borrowers can qualify for this program regardless of credit score by demonstrating need through an interest rate increase. You can contact one of our lending partners for information on this program by calling 9. Avoid a Bankruptcy At All Costs - The problem is that a bankruptcy usually will NOT prevent a foreclosure, it will only delay it. A bankruptcy will also live on your creidt report for years to come causing increased credit card, car loan, and future home purchase rates. At River City we highly recommend avoid a bankruptcy. In almost ever Mortgage or Trust Deed there is a clause that says if you declare bankruptcy you agree to either keep the home out of the bankruptcy or have your loan accelerated (meaning it all becomes due immediately). Due to these factors the money spent on bankruptcy is almost always a waste, unless you have numerous other expenses such as overwhelming credit card and other debt. Even in these cases credit counseling can be a better decision than bankruptcy. Credit Counseling can usually relieve a portion of what's owed as well as reduce or remove interest. 10. Deed in Lieu of Foreclosure, When All Else Fails - If after considering all the options available to you, and discussing possibilities with your lender, it's possible none of the above might be reasonable. In this case, ask a representative at the lender about a deed in lieu of foreclosure. By offering the bank a deed in lieu, you save a foreclosure from being recorded on your credit in most cases (although you usually will have on your credit marked "Not Paid As Agreed."). Participating in a deed in lieu will often mean you might not be able to buy a home or refinance for about 2 years, however foreclosure sometimes means it might take 7 years to be able to purchase again. The bank allows this process because it saves them legal fees and from going through a foreclosure process. If you have any questions, feel free to call us with any questions, we're happy to help in any way we can. We know that for many people facing foreclosure, selling a home is not in their best interest. We are most interested in helping the communities in which we live and serve. You can reach us with any questions toll-free at (866) 456-1862 or via email at Questions@RCREonline.com |
are numerous families in the St. Louis metro area, especially certain cities such as Florissant, Hazelwood, Saint Ann, and others, that are facing foreclosure right now. At River City Real Estate we work with countless investors who purchase foreclosed so we often see the positions the banks are in. We also work with the families that foreclosures have effected by helping them apply for
