9 Ways to Avoid Foreclosure-Sonoma County Homeowners take Note!

FORECLOSURE

There are alternatives for Sonoma County, California Homeowners looking down the double barrel of Foreclosure! Here's what It Really Means & How to Avoid It (always, I mean ALWAYS, consult with a Tax Attorney,Real Estate Attorney and/or CPA to determine various liabilities as to loan recourse,tax liabilities and debt relief!)

 9 Ways to Avoid Foreclosure: 

REINSTATEMENT: Bring your loan current-Remember in the greatest state of California your re-instatement runs with the default process. You bring your payments BACK to current and the issue is solved. However, the bigger question-why did you get behind in the first place? You may wish to sit down and explore your financial picture more closely. Is this the path you really wish to travel?

FOREBEARANCE: Temporary repayment plan-You're behind, contact the lender, work out a payment plan to get BACK to current. Once again, see above as to WHY IS THIS HAPPENING!

REFINANCE: New loan with reduction in monthly payments-The "Obama Plan" had  a cap as to the max Loan to Value ratio. Here in California where prices have dropped 30-60% this just does NOT compute! Most likely refinancing, unless you put a super chunk of cash DOWN when you bought your home, will not be an avenue you can travel as the value of your home is substantiall BELOW what is owed on the house!

LOAN MODIFICATION: Modify original loan terms-You can do this YOURSELF!! No advanced fees are allowed any longer! However, you just can't be a disgruntled homeowner who is upside down on your house. You must meet criteria of insolvency and hardship to get a lender to allow a loan mod. But don't kid yourself either! Will this REALLY solve your issues? Or just kick the can down the street a while longer? Natinally 66% of loan mods are in default!

SELL THE PROPERTY: Use equity to payoff or pay difference-You sell the house, if you end up having to bring money into escrow to make up the loss, AND have the funds to do this, then this is your best bet to avoid a position which may drain your finances further. The "get out of Dodge" scenario! Don't have the money? Then see "Short-Sale" below.

RENT THE PROPERTY: Must make loan current-relocating? Renting might be a smart move but it also depends if you can rent the property for an amount sufficient to cover your debt service. Do you want to start "feeding" a negative cash flow house?

SHORT SALE: Negotiate with bank to accept sale under loan amount-Here you owe MORE than what the house is worth on the open market. You obtain offers, present one to the lender and convice them, due to your hardship, insolvency issues, that this is the BEST deal for all parties concerned. Right now in Sonoma County, we are closing just over 90 "Shorts" a month or roughly 15%  of the huge amount now in escrow. Average days on the market is hovering around six months. However, if you KNOW the process it can go a lot faster! Choosing the RIGHT Realtor for the job is the key.

DEED IN LIEU OF FORECLOSURE: "friendly foreclosure"-the huge number of default rates in  loan modifications may make this more of a reality in the future. The "Deed in Lieu" simply means you GIVE THE PROPERTY BACK to the bank without the foreclosure process. This is an agreement YOU and the Bank decide is the best, least expensive, route to getting you OUT of a situation with NO financial remedy. This may begin a whole new cottage industry of "assigned" properties similar to the REO market where the bank assigns a foreclosed house to a realtor for sale.

BANKRUPTCY: Will stall foreclosure but not prevent it-The nuclear option. This must be considered with the advice of professionals. Sometimes this is THE way to go. Credit wise it is very devastating.