Facing foreclosure? What are your options.

By
Real Estate Agent with Volo Law & Legal Realty

Chances are if your facing foreclosure your completely stressed out.

 

If the foreclosure is on your Primary residence you may have more options than if it is on a rental property.  Also making home affordable is typically for first loans that are $729,950 and below, owner occupied, loan originated before 1/1/09, and your first payment fully amortized is greater than 31% of your gross income.  The making home affordable or (HAMP) program is regulated by the governnemt.  We have "Guidelines" the lender/servicer is supposed ot adhear to.  Howver even if your loan is above $729,950 you may then qualify for an in house modification.  Known as CHAMP at chase!!  May be easier to qualify for when the home is your principal residence. 

 

The first thing you may want to do, if you havent done so already is call your lender and submit a Loan modification package with all of the supporting documents. 

 

One of the most important things is, dont just fax in the paperwork without calling.  Most lenders require you to call them and give verbal financials over the phone.  I have head of home owners who havent gotten anywhere because they simply fax in the requried documents.

 

You need to make sure your calling the right department,  You may need to call the Foreclosure departement, Loss Mitigation Department, eminent default department, etc.  Make sure your calling the right department, and always keep a log with the name and number of person you spoke with.  Try and get an id# as well.

 

Typically if you submit a complete foreclosure loan modifition at least 8 busines days before the foreclosure sale you should be ok.  I have submitted them even closer to the sale date but your risking the lender saying they are not required to review your modification package. 

1st call the lender, get the right department and find out all necessary documennts you need to send in.  One of the craziest things is finding out ahome owner got denied because they didnt check a box or sign or date something:

 

Most typical mistakes my clients have done:

fill out 4506t form incorrectly,  make sure to read this form.  If your filing a 1040 make sure and check off 1040.  Also sign and date and put your phone number.  I have actually gotten into an argument recently with a relationship manager over a rediculous 4506tform.  My client simply marked the wrong box.  when this happens the lender will most likly send a letter saying they need a new form and the home owner wiill think I already sent it in.  they do not tell you it was done incorrectly.

 

Bank statemetns,  send every page, even blank ones.  If the lender sees page 7 of 9 they will want all 9 pages.

 

sign and date page two of your taxes!!! No one ever does this!!!

Hardship letter.  Be consice, to the point sign and date..  Try and send a letter that states what caused the hardship and if your doing better now financailly or what the expected outcome is. 

 

Financials,  biggest mistake every one does is think if I look poor the lender will reduce my paymetn even further.  think of it like this, you have to qualify for a new payment.  If your income is too low the lender will deny you.  I do a Net present value for all of my clients this way I know the needed income to qualify right from the beginning.

 

I actually had a person from a lawfirm figure out number strickly from her financial calculator.  She was incorrect even though she said I was incorrect.  the underwriter is looking at several items, the curent market value, REO stigma,  chances of redefault, etc.  It is not a simple calculation .  All of the underwriters typically do a NPV to know if the lender will make more money modifying or foreclosing.  the lender is supposed to modify if they make more money doing so. 

 

If your facing foreclosure, call your lender, prepare a  loan modification package and make sure you send it to the right department.Call back 24 hours after you submitt the file.  I have had previous coworkers who simply submitted the file and never called back!!! It is imperative that you call the lender to confirm receipt of all of your docuemetns.  You will also want to know if they need additional documents.  About every 90 days or so the lender may want new paystubs and bankstatements.  

 

Of course you may consider filing bankruptcy to stop a sale temporarily or a civil lawsuit depending on your scenario.  

 

My biggest advice is do not wait untill the day before your sale date to do anything.  The sooner you act the better you chances of getting a modifcation.  If the lender has added 15 months worth of payemtns to your balance it will be that much harder to get a modificaiton.

 

Of course you may want to consider a short sale if you find out that you simply cannot afford the new modified payment.  A short sale is significantly better on your credit than both a foreclosure or bankruptcy.

 

You should be able to buy a home that much sooner with a short sale or modification. Try to avoid a foreclosure if you can. 

 

Best of Luck

 

JoAnna Jensen

925 699 5041

Legal Realty

Volo law 

If you need help with an underwater loan, considering a short sale.  I do Net Present Value worksheet for all of my clients. 

 

Not legal advice

 

Posted by

JoAnna Jensen

Executive Assistant 

Volo Law 

925 699 5041

Your Real Estate Advocate

Loan Modifications, Short Sales, Debt Settlement, Short Refinance 

Streamlined Refinance for Current/ Negative Equity Loans

Comments (2)

Phil Leng
Retired - Kirkland, WA
Phil Leng - Retired

Hi JoAnna,

VERY thorough presentation!

Enjoyed reading it and am sure anyone needing your services who reads it will contact you.

Thanks

Phil

Mar 10, 2011 08:29 PM
Dan Edward Phillips
Dan Edward Phillips, Humboldt and Del Norte Counties, CA - Eureka, CA
Humboldt and Del Norte Counties, CA

Good Morning JoAnn, thanks for posting the excellent input for home owners in trouble.

Mar 10, 2011 10:32 PM