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Nine Options When Facing Foreclosure

11-08-09

You may be facing foreclosure… so what are your options?!? Try to look at the situation more from a financial standpoint rather than an emotional standpoint. This way you can more successfully analyze which option might best suit your needs and desires to move you towards resolving your financial difficulty. One very important thing to remember: Time is of the essence. Take time to think through your situation and make a decision. Then, take action right away so you have enough time to complete the solution you choose.

Nine options when facing Foreclosure

1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.

2. Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.

3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.

4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.

5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.

6. Partial Claim – A loan from the lender for a 2^nd loan to include back payments, costs and fees.

7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.

8. Bankruptcy – This option can liquidate debt and/or allow more time. I can refer you to a qualified bankruptcy attorney.

--Chapter 7 (Liquidation) To completely settle personal debt.

--Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

--Chapter 11 (Business Reorganization) A business debt solution.

9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid). The homeowner may sell the home without lender approval through a conventional home sale. In this case, the homeowner will get cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender by your Real Estate Professional if what is owed is MORE than the property’s value.

I affirm that I have read this and understand that I have several options available to me and that there may be more than those listed above. I affirm that I have been advised that I should consult an Attorney and CPA. Understanding this I know that I have the option to choose to use The Foreclosure Mitigation Company to assist me in negotiating the short sale of my home.

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Tax & Credit Consequences Chart - Short Sale vs. Foreclosure

10-26-09

Kenny Wagner

How long will I have to wait to purchase a house again?	Short Sale 2 years	Foreclosure 5-7 years
What are the potential IRS tax consequences as a result of a short sale or foreclosure?	Mortgage Debt Relief Act of 2007, provides certain protections from 1099 tax liability if the short sale is on a primary residence. Every seller’s financial situation is unique and it is advised that the seller seek advice from a tax professional for their own specific circumstances.	The tax consequences for a foreclosure situation have the possibility of being even greater, based on the amount of dollars the lender is not repaid when the borrower defaults on the terms of the loan.
What are the potential credit consequences as a result of a short sale or foreclosure?	According to new Fannie Mae guidelines, after a two year waiting period from the completed short sale, borrowers can obtain new financing for any type of property i.e., primary residence, second home and/or investment - no other restrictions apply.	According to new Fannie Mae guidelines, after the required five+ year waiting period from the completed foreclosure, borrowers will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680. In addition, borrowers will be limited to purchasing primary residence only.

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What is a Short Sale? - FAQ's

10-26-09

Kenny Wagner

**This is part of a short sale packet that was given to me by my short sale trainers when I was getting trained on how to help others to successfully complete a short sale. I was told that I was free to use this to provide to my short sale clients**

What is a Short Sale?

WHAT IS A SHORT SALE? A “Short Sale” or “negotiated settlement” or “short pay” occurs when a Lender agrees to accept less than the amount owed to payoff a loan as an alternative to foreclosure. If the property is worth less than the amount owed on the loan, then even if the Lender forecloses and takes back the property, they know they are going to take a loss. We can often convince a Lender that they will “do better” if they take less than what is owed now rather than taking the property back by foreclosure and trying to sell it later.

HOW LONG WILL IT TAKE? The Short Sale negotiation process can be a lengthy one. It may take several weeks or sometimes several months to get an approval. Many Lenders have several layers of bureaucracy, insurers, and investors that we will have to maneuver through in order to get a Short Sale approved. So it is important to be patient during this long process.

BUT MY HOUSE IS GOING TO FORECLOSURE, WILL I HAVE ENOUGH TIME? Maybe, maybe not. Just starting a Short Sale will not automatically stop a foreclosure. However, many times we can convince a Lender to stop the foreclosure to let us attempt to negotiate the Short Sale. So, while there are no guarantees, it does not hurt to try.

CAN I STAY IN THE HOUSE? The key word in “Short Sale” is sale. The purpose of a Short Sale is to get the property sold. So you will be moving. This is not a program that can stop a foreclosure and allow you to keep the house indefinitely. It will be easier to sell the house if it is vacant, so you should make plans to move as soon as possible.

HOW DO I KNOW THIS WILL WORK? You don’t. We cannot, have not, and will not make any promises to you that this will work. Once you missed a payment, the Lender is in charge and can proceed to foreclosure if they want to. But we know they do not want to and we are very good at presenting alternatives to the Lender that they often want to accept rather than foreclose. We are very good at what we do, but NO PROMISES are being made as to whether or not the Lender will accept a Short Sale – they may or may not.

WILL I GET ANY MONEY FROM THE SALE? NO. A universal requirement of Lenders in granting a Short Sale is that the borrower will not get any proceeds from the sale of the property. The Lender is going to take a loss on your loan – they are not going let you get any money.

WHAT HAPPENS IF THIS DOESN’T WORK? Your house will likely go to foreclosure. A Short Sale is something we try after you have exhausted your other options.

WHAT IS A “RELEASE”? A Lender may offer to “release” its security interest against the property in exchange for less than the total amount of the note. A release will allow the property to be sold without paying off the obligations of the note. However, the note is not satisfied. Advantages: This successful Short Sale will allow the property to be sold and thus avoid a foreclosure.

Disadvantages: The remaining debt on the property (sometimes called a “deficiency”) still exists. You are still liable for the note – in other words – you still owe the money. Reality: It is not likely that the Lender will pursue the deficiency unless you have other significant assets, and if you don’t try a Short Sale and the property goes to foreclosure, you are going to have a deficiency anyway.

WHAT IS A “SATISFACTION”? A Lender may agree to accept less than it is owed as complete and total satisfaction of the note and release its lien against the property. Advantages: Your note and obligation to the Lender are satisfied for less than you owe. When the property is sold, the debt is paid off completely. Disadvantages: You may have some tax consequences that you should discuss with your tax advisor due to the fact that the Lender is making money you owe disappear. Sometimes our negotiations are successful in obtaining a satisfaction. Sometimes all we can get is a release.

WILL THERE BE TAX CONSEQUENCES? If we are successful in obtaining a full satisfaction, then there will be tax consequences just like winning the lottery, getting a raise, or finding a bag full of money. Essentially a satisfaction of a debt is like finding a bag full of money and you should consult with your tax advisor as to whether or not a successful Short Sale will result in taxes owed. However, we know of very few people who do not want to win the lottery because there may be tax consequences.

HOW CAN I HELP? The Lender will require a review of a financial package that usually includes: two months’ bank statements, two months’ pay stubs, two years’ IRS tax returns and other information. The leading cause of delay and even denial of our offer to the Lender is caused by the Seller failing to deliver these items in a timely manner. To help us succeed, please find as much of this information as you can right now and complete the a “Financial Worksheet” – this will help us work faster and increase our success.

Acknowledged this _______day of ___________, 20__.

SELLER(S):

Sign Name: ________________________________________

Sign Name: ________________________________________

BUYER(S):

Sign Name: ________________________________________

Sign Name: ________________________________________

2 Comments

Short Sales - Time to Take Control

10-17-09

Kenny Wagner

Short Sales - Time to Take Control

I mentioned previously (http://www.foreclosuretruth.com/blog/sean/are-foreclosure-sales-simply-h...) that as a society we don’t have the political will to foreclose on every mortgage in default. As a result, we see government interventions including foreclosure moratoriums, troubled asset relief, and new loan modification programs. However, these are at best stop gap measures — each failing to adequately reduce principal balances to address the core problem of negative equity.

It’s time to stop waiting for a government bailout or for the bank to come take the house. Homeowners in default don’t have to choose between the lesser evil of foreclosure or a government solution that leaves them a prisoner of debt. There is another way — a short sale.

A short sale is a sale of a home for less than the amount owed on the loan or loans. There are many reasons why a homeowner who receives a notice of default should take charge and aggressively pursue a short sale. First is the impact to the credit report. Dealing with debt via bankruptcy affects a credit report for 10 years vs. a worst case of seven years with a short sale. When it comes to buying another home, foreclosure prevents the owner from getting a Fannie Mae loan for five years as compared to two years for a short sale. Then there is the opportunity to negotiate a full release from all lenders, allowing the homeowner to settle with no concern of future collection efforts. And proactively negotiating a short sale doesn’t bear the stigma of foreclosure or walking away from a debt.

However, navigating a short sale is not for the faint of heart or the inexperienced. Lenders differ greatly in how they respond to offers. Some lenders, such as Wachovia, are aggressively processing short sales, while others, such as Bank of America, are more cumbersome. (You can get detailed information about specific lenders at http://www.foreclosureradar.com/short-sale-report)

In addition, the regulations can be confusing, even to some industry professionals. In August 2009 in California, Senate Bill 306 was approved, which made changes to the California Civil Code related to real property transactions. (See http://www.leginfo.ca.gov/pub/09-10/bill/sen/sb_0301-0350/sb_306_bill_20... for the full text of SB 306.)

Some analysts have said they expect that SB 306 will dramatically speed the short sale process. In reality, SB 306 doesn’t address the overall short-sale timeline, just steps in the process after the agreement is executed. Specifically, a lender now must respond in writing to a request for a short-pay demand statement in 21 days. Since lenders already have a similar requirement for requests for a payoff demand for loans not in default, this will not likely improve short sale timelines dramatically.

When it comes to distressed properties, a REALTOR® is in the best position to partner with a homeowner to secure an offer on the home and negotiate a short sale with the lender. Proactive REALTOR®s use tools like ForeclosureRadar.com to locate homeowners best suited for short sales, to track the process and to monitor the status of the property during the short sale. Tracking and monitoring is important to insure that the property isn’t foreclosed on before the sale is successfully completed, a matter of interest not only to the sellers, but also to the buyers.

Finding an agent that is a good fit is more challenging when facing foreclosure. A few key questions will help verify that the agent has the knowledge, experience and infrastructure to handle a short sale scenario, such as:

How many short sales have you handled in the last year? How many were successfully closed?
Have you worked with my lender before?
Do you work with the lender directly or with a short sale processing company?
Can I get three references of homeowners for whom you have executed a short sale?

Homeowners should also seek advice from a qualified accountant and real estate attorney.

Foreclosure is not necessarily inevitable. A homeowner who receives a notice of default should contact a REALTOR® to investigate the possibility of a short sale. It can offer the quickest and cleanest path to financial recovery.

Sean's blog

1 Comment

No Equity In Your Home? Or Behind On Payments? It's Not Your Fault...

10-14-09

Kenny Wagner

Hello Neighbor,

If you find yourself in a position where you owe more than your home is worth and you need to sell, a short sale may be your best option. But don't get taken for a long, stressful ride by a self proclaimed 'expert'...

"What is a short sale?"

Simply put, a short sale is a real estate transaction where the homeowner owes their lender more than what their property is worth and they need to sell. In a short sale, the lender must approve and accept less than what they are owed as full payoff (this means they may settle for $400,000, even if you currently owe them $500,000...even if the loss is hundreds of thousands of dollars).

Are you facing a financial hardship that you know will decrease your income?

Are you getting behind on your mortgage and you're not sure if you can catch up?

Or do you just need to sell quickly but your home is worth less now than when you bought it?

If you are facing any of the situations above, and you think a short sale might be your best option, then read on. If you're still not sure and just want more info, then email us to request a free copy of our article "The 9 Alternatives When Facing Foreclosure"

Don't worry. It's not your fault...

You gotta remember, we've all had our ups and downs in life and a lot of other good people are also in the same tough spot as you. Life seems scary when you're facing the reality of foreclosure and I know how you feel when you just don't wanna answer the phone any more...

We all agree that we're in the middle of a national mortgage crisis and that, in many cases, homeowners who have bought or refinanced in the last few years have been seriously abused by unethical lending practices!!

You bought your home and hoped (like we all did) that it would increase in value (and some folks were even promised it would!), but most likely the harsh reality is that now your home is worth less than when you bought it and the value is still declining sharply.

I've helped hundreds of homeowners in this position to get the help they deserve. I've also, helped train hundreds of real estate professionals both locally and across the nation to do the same for their clients.

It's sad but true!

Did you know that nearly 90% of the homeowners nationwide who try to "short sale" their home will end up losing their home to foreclosure due to an uneducated or lazy agent?

Don't allow this to happen to you!

I hate to say this about my fellow agents, but the majority of them that are "trying to help" have not been properly trained and sadly, they are misinformed as to how to even negotiate with lenders. Some even get so far as to submit your 'short sale packet' and then just sit back and wait for a response! In the end, they simply don't know how to help you and you will become one of those "90%" that were not helped.

"Short sales are not easy!"

...unless you seek the help of an expert agent with a proven track record. I have been personally trained by a former Chief Loss Mitigator who is a career loss mitigator and asset manager with 20 years in the business (he is ultimately the guy at the bank who accepts or declines short sales). Actually, I went so far as to make him my partner and train my entire office. We are now helping save even more folks from foreclosure.

We have successfully negotiated short sales for hundreds of families and as you can see from my recent approval letters below (I swap out some of my recent approvals every couple months, so you will notice these will have been from within the last 90 days), we actually get the banks to say YES to our short sales. Before you agree to have an agent help you sell your home, ask him/her to show you just one short sale approval within the last 6 months... I doubt they can.

The best part is, my business partner, has taken his tips and tricks from working INSIDE THE BANK and taught my team and I exactly how to ethically BEAT THE BANK... 93.2% of the time!

My partner most recently worked for IndyMac Bank, a top ten lender, as the head of their HELOC loss mitigation division. His insider knowledge and broad base of industry contacts allows us to get our approvals faster than any other agents in Southern California! In fact, we are constantly solicited by agents nationwide to 'help them' get their short sales approved.

Now it's up to you...

I am ready, along with my team of experts, to go to battle for you. Are you ready to take a serious look at your options and see how a short sale can help you:

Avoid paying TAXES on the money the bank loses at foreclosure! (Yes, you may have to pay taxes on the amount of loss to the bank if the home goes to foreclosure!)
Save your credit from the "Foreclosure" ding
Avoid Bankruptcy
Avoid Foreclosure
Relieve the stress that this financial burden has become
WITH NO OUT OF POCKET FEES OR ANY UP FRONT COSTS OF ANY KIND! …or in other words, you pay me nothing and if I do my job and save you from foreclosure, only then will I get paid by the lender!

If you have any questions that will help you better understand how the short sale process works, please contact me at me directly.

Kenny Wagner
Short Sale Specialist

Foreclosure Mitigation Specialist

The Foreclosure Mitigation Company

702-204-3945 Direct

206-971-5003 Fax

See Below for a sample of successful results...approval letters for short sales.

Not all agents can do a short sale and not all people qualify for our help. I am here for you if your situation meets the following criteria:

You have a valid hardship
You have little or no equity in your home
You are unable (or soon will be unable) to pay your bills on time
You want to work with an expert

If you're not sure and just want to find out if you qualify, give me a call and I will walk you through your options. Believe it or not, you may just need help getting a temporary reduction in your payments to 'catch up'. In any case, call me to talk about the several options that you may not be aware of.

If you don't know what else to do and you don't call me at 1-702-204-3945, what will it cost you in damaged credit, frustration and stress? If I am unavailable when you call, I have my assistants taking calls from 6am to 10pm Pacific time Monday through Saturday.

I know how you feel and I can help.

Sincerely,

Kenny Wagner

1-702-204-3945

KennyWagnr@gmail.com

P.S. Don't let the lender's abusive scheme take advantage of you and cause you to lose your home to a foreclosure auction! Save your credit and have peace of mind dealing with an expert.

P.P.S. If you are still not sure, call me directly to see what I can do for you AND at the very least learn what your options are.

See Below for a sample of successful results...approval letters for short sales.