The recently passed American Housing Rescue and Foreclosure Prevention Act provided new laws and regulations aimed at stimulating the real estate market. This legislation also offers tools for many who had previously had only foreclosure and bankruptcy protection to turn towards.
These foreclosure prevention tools include (Housing and Urban Development) HUD-approved foreclosure intervention hot-lines tax incentives for buyers of home in areas overrun with foreclosure, and foreclosure specialists offer helpful advice and loan modifications and workouts.
There are several options available to those distressed homeowners who act quickly and do not wait until the bank has already filed notice of a trustee (foreclosure) sale.
At this point, the clock is ticking to far against you as it can take more than 60 days, often more, to get a loan modification or workout.
Also, if you are more than 30 days late, your credit can be negatively impacted. Thus, inherently, much less incentive for a seller to work hard to prevent a foreclosure.
Here are 5 options you have if you want to avoid foreclosure.
- Re-finance can be difficult due to the decline in real estate values. However, often a bank may offer a re-finance to pay off other high-interest debt like credit cards so that you will have enough income to pay your mortgage.
- Short Sale - If you can prove financial hardship (loss of job, health problems, etc...) often a bank will allow a sale for a lesser amount than owed. Speak with a CPA as there are tax implication to a short sale.
- Deed in lieu of foreclosure - an extended pre-foreclosure process (minimum 90 days in Arizona) is costly to the bank in terms of interest lost and potential decrease in property values. The bank may want to take back the home in exchange for release of debt by the owner so they can sell immediately. Again, ask your CPA about potential negative tax implications of a Deed in lieu of foreclosure.
- Loan Modification - banks have been asked to cooperate with the American Housing Rescue act to work with borrowers to keep them in their home as foreclosures significantly impact their bottom line. If you are still able to make the majority of your monthly mortgage payment contact your bank with your financial information. They can reduce the interest rate (typically to 5%) and allow you to pay the new lesser monthly mortgage adding the difference to the principal of your loan.
- Forbearance - If you are past due on monthly payments, yet cannot make up the accumulated missed payments, your bank may add those payments to your principal and allow you to pick up paying starting today. This is assuming you have the ability to keep paying monthly.
In Phoenix and the other towns like Scottsdale and Fountain Hills that make up Maricopa county we are suffering from large amounts of foreclosed homes seriously hindering sales of homes and crippling home prices.
If you are in the unfortunate situation that you may have to consider foreclosure, contact your bank first as more and more lenders want to work with needful sellers to keep them in their homes.
If you need help with a mortgage loan workout or refinance or a short sale , look no further than the many experienced professionals here on Active Rain.
_________________________________________
Copyright © James Wexler *Loan Workouts Bank Don't want you to Know *
Contact James Wexler (480) 221-8080 for your Phoenix | Scottsdale area Real Estate needs
Comments(6)