Thomas Janos

Hello again everyone, Today I will cover what needs to be done when selling a home in foreclosure.

When listing and marketing homes in foreclosure there are specific time limits in getting the property sold and closed before the end of the redemption period. The homeowner needs to understand they do not have the luxury of overpricing in hopes of getting more money because it may take longer to sell. They need to understand that when they are not making payments on the mortgage, the amount they owe keeps increasing every day. It is very important to price the home competitively for a faster sale to preserve as much equity as possible.

The homeowners will be charged a daily interest that will eat up any equity very quickly. You will also have the banks attorney fees added to the payoff amount.

It is important that a title seach is done right away on your property in order to know about all liens on the property. This gives us time to address any problems that may arise. With the time restrictions you can not afford to have delayed closings because of title problems. Time is NOT on your side during a foreclosure.

Don't forget to look for our future articles that will cover:

1. If you should sell even if there is no equity.
2. Choosing a Realtor
3. Our philosophy and Goals for our foreclosure clients

Good morning everyone and thank you for takikng the time to visit our blog. Today I will go over part 2 of our foreclosure handbook that covers what a homeowners options are during a foreclosure. If you should have any questions don't hesitate to call us at 651-407-7803.

What are the option for a homeowner in foreclosure:

Prior to the Sheriff's Sale you can still bring the mortgage current. Once the lender has startedthe foreclosure process they will not accept partial payments on the amount past due. The borrower must pay in one lump sum all the back payments, accrued penalties and attorney fees. This lump sum is usually several thousand dollars. Of they have a resource to pay this lump sum (maybe relatives or friends would help) it must be done prior to the Sheriff's Sale. Once the Sheriff's Sale occurs this is no longer an option. The mortgage can no longer be reinstated.

Here are a few options that my work for your personal situation.

1. Reinstatement of Loan (Cure): This option is paying the lender everything that is owed in one lumb sum to include missed payments, any late fees associated with these payments, foreclosure fees, legal fees and the principal owed during the delinquency. A cure may inbolve the seller curing or deeding it to the investor "subject to" the existing loans, who will cure. Therer is a risk to the homeowner that the lender may accelerate the loan because of the due-on-sle, and the homeowner no longer owns the property and has no recourse if the investor doesn't pay the loans. (There are many scams out there based on this option so please BEWARE and I would recommend you hire a Real Estate Attorney BEFORE signing any agreements involving a cure. I personally never recommend this option to any of my clients."
2. Repayment Plan: This is a written agreement between the lender and the seller. These plans require higher payments then the regular monthly mortgage amount for a period of time until the loan is brought up-to-date.
3. Loan Modification: A loan modification involves changing one or more terms of a mortgage. Modifications can be considered to reduce the interest rate of the mortgage, change the mortgage product (from an adjustable rate to a rixed rate, for example), extend the term of the mortgage or capitalize delinquent payments (add delinqquent payments to the mortgage balance-only available in extreme hardship situations). Modifications are NOT easily granted and there must be strong,justifiable reasons for the request. We have an outside company that performs all our modifications for our clients. This is not something I would recommend a homeowner try to negotiate themselves.
4. forbearance Agreement: The lender will allow you a period of time (3-6 months typically) of either low payments or no payments at all. Unless the loan term is extended (which happens rarely), the later pauments generally will have to be higher than the original monthly mortgage payments until the loan is up-to-date.
   
5. Special Forbearance (FHA Loans only): Allows eligible borrowers to postpone monthly mortgage payments for a minimim of four monts. While there is no limit on the maximum number of months, at no time may the agreement allow the delinquency to exceed the equivalent of 12 monthly PITI installments.
6. Deed-in-Lieu: A Deed in Lieu is an option in which a borrower voluntarily deed collateral property in exchange for a release from all obligations under the mortgage. A DIL may not be accepted from borrowers who can financially make their payments. If a borrower qualifies for a DIL program they may be eligible for cash back from the lender as in the "Cash for Keys" program. Most mortgage companies prefer homeowners to sell the property in a Short Sale over a DIL.
7. Cash Sale: The borrower sells the property, pays off his loan, and, depending on the equity, may net some cash out of the deal. The challenge, of course, is being able to sell it quickly enough, which most ofter requires a substantial drop in the price.
8. Short Sale: The borrower makes an agreement with the investor to sell it for less then is actually owned, subject to approval of the lien holders. This generally results in no cash to the homeowner, but will be better credit wise then a completed foreclosure. In the current real estate market about 90% of the foreclosures we see must be handled as a short sale.
9. Refinace: The borrower may be able to refinance and get a new loan, but generally this is difficult because the borrower has little equity and poor credit. The new loan likely will have higher payments than the old loan.
10. Do Nothing: The worst choice for the seller, whose credit will be ruined, but he can stay in the house for several months for nothing, save up some cash, and move when the lender or the high bidder from the auction eventually evicts the homeowner.

We at The Janos Group have an outside Mitigator on our team that will negotiate with your mortgage company to restructure your loan and assist you in keeping your home if you so choose, and if you qualify to do so.

I hope this helps some of you in making the correct choice regarding the option best suited for your personal situation. If you have any questions or would like a FREE no obligation consultation with us please don't hesitate to contact us at 651-407-7803.

Please watch for the next few issues of our blog where we will discuss:

1. Selling a property in foreclosure
2. What to do if you have no equity
3. How to choose a Real Estate Consultant to sell your foreclosure property

The Janos Group
ReMax Specialists
4910 Highway 61
White Bear Lake, MN 55110
651-407-7803 Office
651-407-7804 Fax
Tom@TheJanosGroup.com
www.TheJanosGroup.com

Mortgage foreclosure is a complex process. Some people may approach you about "Saving" you home. You should be careful of such promises.

The state encourages you to become informed about your options in foreclosure before entering into an agreement with anyone in connection with the foreclosure of your home. There are government agencies and non-profit organizations that you may contact for helpful information about the foreclosure process. For the name and telephone number of an organization near you please call the Minnesota Housing Finance Agency (MHFA) at 651-296-8215. 1-800-710-8871, TTY 651-297-2361 or the MHFA website at: http://www.hocmn.org/ForeclosurePrevention-map.cfm The state does not guarantee the advice of the agencies so if in doubt please contact a Real Estate Attorney for legal advise as we are not attorneys and can not give legal advice.

Do not delay in dealing with the foreclosure because your options may become more limited as time passes.

We have included some other Government Agencies that help people in foreclosure in the back of our handbook "What you need to know about foreclosures" if you would like a hard copy.

For those of you that are having trouble paying your mortgage this information is for you. This is the Minnesota Foreclosure Process and what you can expect. This article is taken from our handbook "What you need to know about foreclosures", we distribute this handbook to all our clients that are facing foreclosure and to other Realtors that take our Foreclosure Classes for their required Continuing Education.

The Foreclosure Process:

There are two ways for a lender to foreclose on a mortgage. The judicial process and the non-judicial process. The process used by the lender depends on the laws in each state. Some states are judicial only and some states allow both judicial and non-judicial.

The judicial process is a court directed action and like many things through the courts it becomes complicated and expensive. When a state allows non-judicial, which is foreclosure by advertisement, the lenders will use this process because it is simpler and less expensive. Minnesota allows foreclosure by advertisement and almost all mortgage foreclosures here are done this way.

Foreclosure By Advertisement:

When a lender forecloses a mortgage by advertisement they engage an attorney to act on their behalf. the attorney in essence becomes a third party debt collector for the lender. The attorney will file the necessary documents in the county where the property is located and begin the advertisement period. In the state of Minnesota the minimum advertisement period is once per week for six consecutive weeks. Once the advertisement period is completed a mortgage foreclosure sale is held.

The Sale:

the mortgage foreclosure sale, more commonly known as the Sheriff's Sale, is a public auction conducted by the Sheriff's department at the county courthouse. Although it is a public auction most of the time only the attorney for the lender submits a bid. The successful bidder at the sale received title to the property in the form of a Sheriff's Certificate; however they do not receive possession of the property until after the redemption period.

The Redemption Period:

In the state of Minnesota, the homeowner's redemption period is for six months after the Sheriff's Sale; There are special circumstances that allow up to twelve months for some properties; but most residential properties only get six months. during this six-month period the homeowner keeps possession of the property and has the right to redeem title by paying off the grantee of the Sheriff's Certificate. During the redemption period the homeowner has full rights to the property. They may live in it, rent it, refinance (even though most lenders will not choose to give loans at this point in the foreclosure and if they do the monthly payment will be greater then the previous payments that the homeowner was having difficulty in paying) or sell the property. If they do not redeem title within the six-month period they then lose all rights to the property and must vacate the premises.

What Usually Happens:

The biggest difficulty most people in foreclosure face is lack of knowledge about the foreclosure process. Many do not understand te process, they don't know what the redemption period means and they don't know what their options and rights are before the sale or after the sale, and ultimately they loose their home and any chance to help save their credit. Unfortunately their lenders and the lenders attorney will not assist the homeowner's or educate the homeowner as to their rights and in most cases the homeowner can not afford an attorney of their own to help them create a strategy for dealing with their foreclosure or educate them.

This is where we come in. We will take the time to inform the homeowner as to their rights and options at NO COST or obligation for this information. If the only option the homeowner has or wants is to sell their property, then we hope that the homeowner will see the benefits of using The Janos Group and Remax Specialists to market their property quickly and for as much equity in the allotted time.

Please watch for the next few issues of our blog where we will discuss:

1. What are the homeowners options
2. Selling a property in foreclosure
3. What to do if you have no equity
4. How to choose a Real Estate Consultant to sell your foreclosure property

If you would like a copy of our handbook "What you need to know about foreclosures" mailed or emailed to you please visit us at www.TheJanosGroup.com and click the link for "The Janos Group's Foreclosure Handbook" or feel free to contact us with any questions you may have.

Or handbook has a list of Government Agencies that help people in foreclosure.

The Janos Group
ReMax Specialists
4910 Highway 61
White Bear Lake, MN 55110

651-407-7803 Office
651-407-7804 Fax
Tom@TheJanosGroup.com
www.TheJanosGroup.com

Have you been hearing a lot about this new $7,500 tax credit for first-time home buyers, which is part of the newly passed 2008 American Housing Rescue and Foreclosure Act? Is it as great as it sounds?

A new website has been put up with more information about this tax credit. Curiously, the fact that this “credit” has to be paid back over the next 15 years (or when you sell) is conveniently left out of the “At A Glance” section, and you have to scroll down to question #15 in their Frequently Asked Questions to learn about the repayment terms. Did I mention the site was created by the National Association of Home Builders? No way would they want to mislead potential home buyers, right?

To qualify, you must close on your new house between April 9, 2008 and July 1, 2009. A good summary of this tax credit interest-free loan is in this Fortune article:

The “first-time home buyer credit” is a temporary refundable, repayable tax credit equal to 10% of the purchase price of a home, up to $7,500 for singles and married couples filing jointly. (Singles who buy a house together get only $3,750 each, as do married couples filing their tax returns separately.) [...]

But the way the credit works, it’s actually more like an interest-free loan. Two years after you claim this credit, you have to start paying it back. The payback comes over 15 years in 15 equal installments–meaning you owe an extra $500 on your tax return each year. Sell your house, and you have to pay the rest back that year from your profits. (No profits, no pay back. Also, if you die, your heirs are off the hook.)

The allowed credit starts being reduced once a single has $75,000 of modified adjusted gross income, or once a couple has $150,000 of income. The credit goes away entirely at $95,000 for singles and $170,000 for couples.

The justification behind a $7,500 interest-free loan is that it is supposed to ease the “pain” of having to come up with closing costs and a downpayment. But wait… Wasn’t the housing bubble caused in part by people being tempted into buying houses they couldn’t really afford because they didn’t need to first save up for closing costs or a downpayment? I find it ironic that our choice of “buyer assistance” is even more easy lending.

Now, of course I would still grab this tax “credit” if I was going to buy a house anyway. I’d happily take a 0% interest loan on $7,500 for any period. But why not just give us something simple and straightforward, like a check for $1,000? My guess is that the phrase “$7,500 tax credit” works better to pacify angry citizens.

I would always recommend you speak with your tax professional or a real estate attorney with any questions you may have about the credit.

So if you're looking for Townhomes, Single Family Homes, Lake Property, Commercial Properties, Foreclosures, New Construction, or Investment Properties please give us a call today.

WWW.TheJanosGroup.com

The Janos Group
Remax Specialists
4910 Highway 61
White Bear Lake, MN 55110
651-407-7803
Email: Tom@TheJanosGroup.com
Website: www.TheJanosGroup.com