The options of the homeowner:

The options of the homeowner:

1. They can call their bank or lender to work out something. The
borrower may be allowed to reinstate or make the loan current by
paying a lump sum or making scheduled payments over a given amount
of time to their lender. Sometimes people struggle a few months,
lose their jobs, and then get back on their feet again. If this is
the case where income is flowing back into the household, many
lenders will try to work with delinquent homeowners because they do
not want the home to go into foreclosure. Then again, some lenders
are totally opposite. They will not even entertain the thought.
It really depends on how long they have not paid their house
payments.

2. They can refinance their home. This usually happens if there is
lots of equity in the home and if they are not too far behind on
payments. In this case the lender would refinance the existing
loan and include as part of the new loan any late payments, fees,
and any cash that the borrower would need to regain control. It
would all be "wrapped" into one mortgage. Credit rating is usually
not an issue if they can prove the home has substantial equity and
they can support the new payment.

3. They can list with an agent. They may have already tried to do
this, however they have had no luck and foreclosure is approaching.
Many times when they finally decide they are not going to be able
to save their property, they will call an agent. By this time it
is too late because there is not enough time to sell the house
before the auction. Sometimes homeowners tend to think that real
estate agents are out to get money from them because of their
commissions, so they would rather wait till the last minute, then
it's too late and they end up losing their property. Realistically
the only other option is to sell it to an investor quickly. This
is what you want.

4. They can try to sell it themselves on the market. Usually they
have already tried this approach as well and now are very desperate
to do something with the property before it goes to foreclosure.
People tend to be embarrassed they are in foreclosure and they do
not want anyone to know their circumstances.

5. They can give the property back to the lender. If there are no
other liens on the title, the lender may agree to take the property
back. This process of transferring ownership from the homeowner to
the lender under these circumstances is called a Deed in Lieu of
Foreclosure, and is sometimes referred to as a "friendly
foreclosure" because in essence that what it is. The homeowner
walks away. A deed in lieu of foreclosure does not protect the
homeowner's credit rating, nor will it cut off the rights of junior
lien holders. In other words, the lender would take the property
back subject to the junior lien holders. This will avoid the
possibility of a deficiency judgment in the event the property
fails to produce enough to cover the outstanding debts after it
goes to auction. Then again, if the real estate market is booming
and the property has a large amount of equity in it, the homeowner
gives up all rights to receive any overage or surplus from the
auction. So, if the property has a sure amount of equity, it is
better to try and sell the property before they just hand it over
to the lender and "walk away".

6. They can sell it to an investor. This is what you are hoping
for. This is why you spend hours of research and study, so when
the opportunity presents itself, you are ready to act. If they
wish to sell it to you, which happens 90% of the time, then you
begin the negotiation process. This negotiation process is
critical. Many times investors will scare homeowners away just
because of what they say. I'll talk more about this in my next
newsletter.

7. They can file bankruptcy. It is very important you understand
how bankruptcy works. Many people use bankruptcy as a scare tactic.
There are several different "chapters" of bankruptcy. Some are
work-out others are wipe-out, but here is the general idea. When
someone files bankruptcy it's almost like someone builds a
"bullet-proof" barrier around the house. No one can touch you!
However, you are not free of all responsibility and most people do
not understand that. We are not a bankruptcy attorney, but you need
to know the difference between a Chapter 7 and a Chapter 13
bankruptcy so you know what happens.

[Note: Bankruptcy should be the last alternative or option and
should not be used to stop foreclosure unless you have no other
option or else you need the protection of a bankruptcy due to other
circumstances or situations you are currently up against. If you
feel this may be your best option, please seek legal advise from a
bankruptcy attorney in this field.]

8. They can just let it go to foreclosure. Basically they don't
do anything. Then the get evicted after about 2-3 weeks, (unless
your state has a redemption period after the auciton). They
leave with nothing in hand and a bad mark on their credit.
This is definitely not a good option at all, however it does happen.
Those who are in foreclosure are very embarrassed, they never tell
anyone until you see them packing their bags and moving out.

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