Help in Avoiding Foreclosure
By: Diane Tuman, Zillow Content Manager | August 8, 2007
Today’s Wiki Wednesday Feature: Six Steps to Avoiding Foreclosure
Sunday’s New York Times Week in Review section is usually dominated by politics, the war in Iraq, health care issues, or the latest doping scandal. This week, however, even the Minneapolis bridge
catastrophe and America’s failing infrastructure failed to nudge a topic that is reaching epic proportions: the mortgage crisis. The Times’ article highlight front and center, “The Loan Comes Due,” dissects why home loans are drying up and how we came to be in the predicament we are in. The best line in the piece is by Robert Bruner, dean of the business school at the University of Virginia, who said, “That is the core of a financial crisis, when too many people head to the exits simultaneously.” Bruner likens this situation to the Panic of 1907.
I’m not sure we’re at that level, but in case you’re wondering about your own financial house, I uncovered an article in the Real Estate Guide by real estate agent Gerber Benavides of Keller Williams Realty in Manassas, VA, that provides Six Steps to Avoiding Foreclosure. So, if you have an adjustable-rate mortgage (ARM) that is coming due or feel the financial screws are tightening, I would highly recommend reading this article. Perhaps Gerber’s strongest advice is to contact your lender immediately. Evidently, most people stick their heads in the sand, or fall into the arms of fraudulent lenders. Actually, lenders are very interested in helping you keep your house since they stand to lose approximately $60,000 for each failed loan. Gerber does a very good job of itemizing steps you can take if you are in trouble, but if you need more advice, HUD offers tips as well.
(Paul Sahre and Loren Flaherty illustration courtesy New York Times)
Ed: Wiki Wednesdays is a weekly feature that highlights helpful or interesting articles from the Real Estate Guide.
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Comments
27 Comments so far
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John N on August 9, 2007 10:32 am
Foreclosure is a big big problem facing millions of Americans today, unfortunately it is just being address by our politicians to win votes - doing something about it will take them forever! if ever……….
http://www.theforeclosuresinfo.com/blog/
Ralph Thompson on August 10, 2007 10:08 am
Bush announced that there will be no government bailout for foreclosed homeowners. There is an interesting article in todays OP-ED section of the Wall Street Journal. It argues if the government starts bailing out people everytime they get involved in irrational exhuberance such as happened during the housing bubble, such exhuberance will become rational causing even more financial excesses in the future. I wrote in my blog today that the government can offer tax relief for foreclosed homeowners who want to offer their lenders a short sale. Currently, that can result in a tremendous tax bill. That article can be found at http://www.foreclosurematters.info.
Foreclosure Epicenter: Maple Heights, Ohio - Zillow Blog - Real Estate News and Analysis on September 4, 2007 10:22 am
[...] This list might not sound like much now, but with a dwindling tax base, county-wide economic problems, an overabundance of homes for sale and dwindling home values, this is not a pretty picture. Want to avoid a similar situation? Check out a recent Wiki Wednesday post on avoiding foreclosures. [...]
james redmond on September 6, 2007 7:24 pm
Very good article and you are correct that most people do stick their heads in the sand or would rather go down with the house before they give up their hard earned equity. That is the biggest mistake one can make. Please advise that sometimes in a market such as this it all right to lose their equity if it saves their credit or much worse. Sometimes it is also better to bring a couple of dollars to the closing if it will get the deal done. You cannot always put a price on peace of mind. Finally when you are at wits end you might want to try a little owner financing. When done correctly it can sometimes get the deal done. Consult legal advice or make sure you read every and anything you sign. Most importantly don’t panic. Good Luck jimir
MyPhoenixMLS on October 11, 2007 2:11 pm
Great post!
Now, lawmakers and others are proposing “fixes” (some say bail-outs) for the foreclosure crisis. Here’s a list of some of the programs that have already been implemented or are being considered:
1. FHASecure could help nearly a quarter of a million homeowners avoid foreclosure by allowing homeowners in default on their mortgages to refinance into FHA loans (which lenders are more likely to make because they’re backed by the government).
2. Lawmakers have proposed additional legislation – which is expected to pass in Congress – to reform FHA lending.
3. Last Thursday, the U.S. House approved a bill that would offer tax relief to homeowners in foreclosure. Under current law, if a homeowner’s lender forgives part of the homeowner’s debt (e.g. in a short sale, where the home is sold and the difference between the sales proceeds and the loan balance is forgiven) that amount is considered taxable income by the IRS. Under the proposed law, forgiven debt would no longer be considered taxable income.
4. Last week, Democratic lawmakers urged President Bush to appoint a mortgage czar to “help cope with an expected wave of foreclosures from the housing slump.”
5. A number of groups have proposed reforming the bankruptcy code, including expanding Chapter 13 to allow debtors to write down mortgage loan amounts to the current fair market value of their home and restructure the mortgage debt based on a fixed interest rate.
6. In May, the House passed a bill to allow Fannie Mae and Freddie Mac (the largest purchasers of loans on the secondary market and the entities that by default set the “rules” for conventional lending in the U.S.) to purchase loans above the conforming loan limit of $417,000 in higher-cost areas.
7. On Wednesday, the White House announced the creation of a new mortgage industry coalition. The coalition will offer a resource center and toll-free advice lines for homeowners facing foreclosure. The toll-free lines are 1-800-451-4505 and 1-888-995-HOPE.
8. The Chair of the Federal Deposit Insurance Corporation (FDIC) Sheila Bair recently urged mortgage lenders to freeze adjustable-rate mortgage rates and/or convert ARMs to fixed-rate mortgages.
This great blog post: http://bobstahl.topproducerblogs.com/ offers more details about lawmakers’ proposed fixes for the foreclosure crisis.
Ryan Anderson on October 24, 2007 11:02 pm
Its great to see local and national help being offered. The levels of foreclosures are devastating the american homeowner like never before.
http://www.avoid-foreclosure-loan.com/
Terry the Stop Foreclosure Guru on December 2, 2007 2:40 pm
Stopping foreclosure starts with knowing the fundamentals of navigating the negotiating process with your bank or lender. I found a great resource which covers the details;
http://stupidhomeowner.com/my-mortgage-opinion/stop-foreclosure-today/
Scott on January 8, 2008 4:11 am
Thesa, now all we need is for the Senate to pass it and Bush to sign it into Law.
Rhode Island Mortgage on January 14, 2008 1:56 pm
great post packed with good information!
Foreclosure Network USA on February 18, 2008 9:21 am
Thank you for this great knowledge.
This will be certainly help me.
foreclosurefish on February 20, 2008 12:44 pm
The problem is that homeowners “stick their heads in the sand” when they fall behind, you’re right. But the lender having their collection department call 40 times a day also contributes to the problem. Now all these new programs are being offered to be used after the loan is behind by 90 days, and the lenders say they’ll proactively call to offer help. But homeowners who have been hiding from the collections department for 3 months probably won’t even know that the loss mitigation department called.
Free Foreclosure Help on February 21, 2008 7:52 am
Homeowners need to avoid so called gurus and do this themselves. They can get free foreclosure help and assistance in obtaining a loan modification from a few websites on the internet like my website where we have helped save over 25 homes.
If that fails then they should hire a competent mortgage law atorney.
Facing Foreclosure? Don't Panic | Zillow® Blog on March 5, 2008 10:06 am
[...] back in August, we did a post “Help in Avoiding Foreclosure,” and now, seven months later, it is clear that the topic isn’t going away any time [...]
Lisa S on March 5, 2008 11:32 am
Foreclosure Victim
I am stressed about my foreclosure – giving up the home we’ve lived in for years and losing everything we had put into it. I realize the mortgage agreement is legally binding with a strict obligation to make my payments. But things have changed for the worse, now making that difficult. I was hesitant to even consider the thought of foreclosure until I was down to my last penny.
Many unnerving thoughts cluttered my mind. What legal action could be brought against me? Could they repossess my car, and other assets to make up for lost payments? Will my credit be destroyed? Would I ever be able to buy another house again? What would our friends and neighbors think? Would they look at us as deadbeats? Where would we move? These were some of the problems I wrestled with.
After watching the news, it appears this story has been repeated many times across the country for countless numbers of unfortunate homeowners. It looks like about 3 million homes in the United States are facing foreclosure. In addition, statistics reveal that another 2 million homeowners are delinquent on their payments.
You would think that talking to the lender would be all it takes to work out an agreement to avoid losing our home. But from personal experience I have found that lenders, or at least the ones handling our mortgages were extremely difficult to communicate with and most often arrogant and uncooperative. They refused to discuss these matters with me. It seems illogical that they would be so belligerent. Foreclosure is a costly process in itself, not to mention the permanent loss of monthly payments from the occupant. It is in the best interest of both parties to work out a mutually acceptable agreement. The two lenders I have encountered are too greedy to budge from their lucrative position and will demanded I pay many expenses involved in renegotiating a mortgage workout.
What doesn’t seem to make sense is on an insured mortgage loan, the lender recoups most, if not all of his money from the insurance company or government insurer after a foreclosure sale regardless. Maybe that is the reason they care little about working with us homeowners. Many of the companies that receive monthly payments are only servicing the mortgage, and have no stake in the property, and don’t seem to care if the owner defaults. They send past due notices, but they are not overly concerned whether you stay in your home or not. One person mentioned they made more if we did a short sale.
Are you in a similar situation asking yourself these same questions? Would having a step-by-step guide to handling a foreclosure be useful? What format would best serve your needs, an outline, a checklist, a narrative? Stick with me here because I want to find a way out that could help us all. Please write me at foreclosurevictim@tampabay.rr.com with your thoughts, experiences and ideas.
Mark Jones on March 5, 2008 10:31 pm
Most of the foreclosures are due to adjustable rate mortgages(ARMs). Many homeowners who got adjustable rate mortgages (ARMs) on their properties when rates were at an all-time low. Now those adjustable rates have increased and many homeowners find themselves making payments on homes that have no equity or even have negative equity. There is still hope for homeowners in foreclosure. There is a good site where homeowners in foreclosure can get help. Home Search
Here To Help on March 6, 2008 10:16 am
Are you behind on payments? MyCashOffer.net is your solution. We are professional real estate investors that are willing and able to purchase your property for CASH. Please fill out the contact form and a MyCashOffer.net professional will promptly contact you to discuss your property and current situation! WE CAN SAVE YOU FROM FORECLOSURE!
Loan Modification on March 28, 2008 8:13 pm
Great information. The best way to get help for aoa modification is though an attorney.
Mortgage Modification on March 28, 2008 8:14 pm
I agree with yu on that one.
Foreclosure Questions on June 4, 2008 9:14 am
Great article. Thanks.
You wonder just how ugly this thing is going to get.
Dave Jackson on August 21, 2008 5:20 pm
The way I understand it, the federal government will be repaid on the zero-interest, nonrecourse loans. Loans for homeownership properties would need to be repaid within two years, while loans used to create rental housing would have a maximum loan period of five years. Dave
Loan Modification Department on November 17, 2008 5:45 am
It was an early panic button though but today there is more need for the Loan modification and mortgage modifications. We are trying to build a resource for the California Counties here wwww.cdloanmod.com . Thanks
Dean Mostofi on November 17, 2008 11:14 am
The Truth in Lending Act offers the right to rescind your loan if TILA disclosures were not properly given at settlement and this can be used as a negotiating tool when attempting to modify your loan. Most homeowners are intimidated by the process but is is not that complicated and you can do it yourself. Get a forensic loan audit first and then approach the lender. If you fail, then you should retain an attorney who knows how to litigate TILA cases.
There are many ways to fight foreclosure and actually win but you need a very good attorney who can think out of the box.
Dean Mostofi on November 17, 2008 11:18 am
Here is a good place to study foreclosure defense case law.
http://loanaudit.wordpress.com
Loan Modification on December 30, 2008 12:17 pm
If this article is just a prologue to the main article http://www.zillow.com/wikipages/Six-Steps-to-avoiding-Foreclosure/ on Zilow I would agree. Else I do not find it any worth reading.
thanks
Loan Modification on February 18, 2009 6:47 pm
As an addition to those steps, I would say:
7. Always document your communication with the bank. More often than not you’ll get 1 rep who says one thing and the next call they’ll completely deny every saying it. So make sure you record the name of the person you spoke with, the date, and what you said.
Also, be sure to use certified mail whenever you send anything.
Chad on March 5, 2009 10:10 pm
There are a lot of great steps in this blog during some of my research I also found some interesting information on avoiding foreclosure on this article on http://www.homesaver.infotrait.com these two articles combined help me from losing my home.
john on April 6, 2009 9:39 pm
Great Blog!
http://www.cdloanmods.wordpress.com