Millions of people are getting kicked out of their homes, and the U.S. government and mortgage lenders are providing little to no real help. It is a terrifying situation many face, when they have little option, but to walk away from their home.
Tens of millions of Americans desperately need foreclosure help, but pretty much nobody seems interested in helping them.
Foreclosure horror stories are multiplying as large numbers of American families are struggling to pay mortgages, from either job loss, or mortgage rates increasing.
Falling behind on your mortgage is a very serious event in any persons life. I am here to tell you there are many ways to save your home before you get to the point of eviction.
In some states, it can take up to 12 months before the eviction process occurs, and in other states it can happen as quickly as 90 days. It greatly depends on the law and the mortgage holder and how aggressively they pursue your case.
Here Are A Series Of Events That Unfold As Your Home Goes Into Foreclosure
- You know that you are unlikely going to miss your mortgage. The first thing you should do is call your lender. You are in the best situation if you can call before it happens. Don’t put it off, or be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better. If you call and be up front and honest that you cannot make your payment, they will work with you as as the customer about making your financial obligations and commitments.
1. Timeline 1- You didn’t call, and you missed the mortgage payment.
– Lenders may not contact you until you’ve skipped a second payment.
-The bank phones repeatedly.
You Missed Payments, – You Have Several Options:
– Review With Your Lender Repayment Plans – Lenders might agree to work out a repayment plan that is affordable for you. This is called forbearance. You can also spread out the missed payment over a longer term. For example, if your payment is, say, $1,200 a month, the lender might let you add $100 a month to each payment for a year until you are caught up.
– Call an Organization for Help-If your lender is unwilling to help you or refuses to explain the legal options that are available to you, contact a mortgage counselor who can explain your options. HUD offers a database to find counselors throughout the country who are qualified to assist you. Federal or state programs may be able to provide assistance to you. Free legal programs are sometimes available for people who are considered low-income.
– Restructure Loans– This is best if you are now making much less or if you lost your job. Restructuring the loan gives you more time to pay it off and it lowers the monthly payments. This will cost more in the long run due to higher interest rates. However, this option will give you an opportunity to pay down the mortgage and keep your house.
– Fight The Proceedings: Fighting the proceedings can buy you a handful of time. Since the lender has to go through the courts to start the process, time is the only thing you will have. Contesting every step that is thrown at you will allow you to build a plan.
– Delay, Delay, Delay: Delaying your response time once you get your legal documents from the courts is legal and can be done. You will be given a deadline in which you have to respond to. Delaying your response will allow you enough time to either save the money needed to pay your mortgage or find another place to live.
– Sell Assets- Selling your assets can bring in money and it can reduce your costs. For example, you can sell an extra car that is rarely used, sell it. The money from the car can go towards the mortgage, and this reduces fuel and insurance costs. Don’t sell anything that you absolutely need.
– Bankruptcy– Talk with a bankruptcy lawyer before seriously considering this. Bankruptcy will sharply decrease your credit score. Some people that go through bankruptcy will not be able to keep their houses. A bankruptcy lawyer can discuss your situation and he or she will be able to recommend the best course if you decide to file for bankruptcy.
– Review Refinance Options– If you have equity in your home, your credit rating is relatively intact and your lender hasn’t yet filed a notice of default, you may be able to get another loan with more affordable payments. Consider talking with your lender about changing your adjustable loan. For example, the lender might freeze the interest rate before it increases or change the interest rate to a more manageable rate for you. A lender might also extend the amortization period. This is called a note modification.
-Consider a Short Sale And Get out! – It might be better to sell a home and walk out with a fair credit score than to have it taken away in foreclosure.
– Reduce, Waive, Or Tacking Payments To The Principal– Some banks can temporarily reduce or waive your payments. Another common options banks offer is adding the unpaid balance to the principal of your loan and increasing your payments to cover the extra amount.
- Keep in mind that the bank will report the first late payment and every subsequent delinquency to the credit bureau. Even 1 late payment can devastate your credit score. Each delinquency decreases your score, making it more difficult to get a loan or a refinance that might help your situation.
( A general timeline to expect)
Timeline 1- You didn’t call, and you missed the mortgage payment.
Timeline 2 – A Late Notice is sent by the Bank
Time Line 4: 90 days pass and no arrangements have been made, so the Bank issues a notice of default.
The Notice Of Default- When you reach this stage, it is a big deal. “Once you get into that state, it’s a whole different world. Your options are fewer.” Anthony Hsieh, president of LendingTree.com
- Often times the bank will demand a payment under the “note in full“, based on the “acceleration clause“.
Most mortgage notes contain formal language which says that if you fail to pay the bank with monthly payments as promised they can accelerate the note, which they are legally entitled for the full balance of the loan.
Once this happens you legally owe the full balance along with back interest, plus late charges, plus legal fees all at once. You will find at this stage, the bank will not accept monthly payments. They will instead demand much more to reinstate the loan. Once your note has been accelerated you should already have contacted an attorney who is an expert in dealing with these matters.
The Second Stage Of Foreclosure- The Formal Legal Foreclosure Process
Time Line 5: Bank sends by sheriff or by certified mail Notice of Intent to Foreclose.
Time Line 6: Bank begins action in the court system to foreclose.
Time Line 7: Legal notices as required by law begin to be published in local papers.
Time Line 8– No payment or settlement arrangements are made with the lender.
Time Line 9– Notice and waiting periods expire.
Time Line 10– Court holds hearing regarding banks claim. Court issues order allowing bank to foreclose. (Sometimes this occurs very early in the process, every state is different)
Time Line 11 – Legal notice of actual foreclosure sale and advertisements published in local papers.
Time Line 12– House sold at auction to highest bidders
Time Line 13 If the final outcome falls to eviction, be sure to not wait until the last minute to move. Moving itself can be time consuming, so be sure to leave yourself enough time to pack and relocate your items.
Be ready to move your belongings in advance. DO search the Internet for coupons with moving and storage companies. When the sheriff comes out physically, he is there to change the locks and evict the homeowners. Once that happens, your family and yourself will be physically removed from the house with all your belongings by the curb. It is much better to be out of the house , and have your items in a safe locations
Foreclosure Horror Stories
Check out some of the foreclosure horror stories that we have compiled below.
1) Dealing with mortgage lenders has become so frustrating that some people are on the verge of just giving up….
I am self-employed, have been all my life and have owned a home for 30 years. When I started my Loan Modification process in August of 09 I WAS NOT behind on any payments. I sent full documentation, over 150 pages, with the things they needed to verify my income. I am now 2 payments behind and I am getting nowhere. They keep flipping me between Loss Mitigation and Imminent Default, back and fourth month end month out. I made a habit of calling every week, then every two weeks just to be sure all was moving forward. From the middle of November I was told my file was with the underwriter and it would only be 30-60 days. I began automatically updating my income verification, verification that I still resided at the property and an updated 4506-T every month. In the middle of April a rep finally told me I was not in the loan modification process. In fact, that I had been denied on March 2. Keep in mind, I’m talking to these people every 2 weeks. She did a financial interview and sent me a new packet so that I could start all over, resubmitting all the documentation yet again. She told me she was my Account Manager. I completed the packet, called with a question (2 weeks later – over a week to receive the packet and another few days to complete it and gather all my documents again) and learned that my “Account Manager” was on maternity leave and I now didn’t have an account manager. Also, I was told that I had received the incorrect packet…it was the old version rather than the updated version. She asked me to fax four or five pieces of information in the hopes it would, quote, “jump start my file back into the process” and said she we send me another packet. That was mid April. Here we sit, 2-1/2 months later, I have still not received anything in writing about my rejection. And, though I’ve now had people tell me on three separate occasions that I would receive a new packet, it has yet to show up on my door step. I asked several times why my application was denied and the answer I finally got last week was that it was because I was DELIQUENT in my payments. Call me crazy but I thought that was the whole point??!! I almost hired a third party but am so hesitant to take that step. Every time I get on the phone with them it takes an hour out of my day and I am usually so upset I find it difficult to work, so I just don’t call. I’m going to sit back and regroup and decide what I need to do next.
2) One man in Ohio named Terry Hoskins actually bulldozed his own home rather than let the bank foreclose it….
“The average homeowner that can’t afford an attorney or can fight as long as we have, they don’t stand a chance,” he said.
Hoskins said he’d gotten a $170,000 offer from someone to pay off the house, but the bank refused, saying they could get more from selling it in foreclosure.
Hoskins told News 5’s Courtis Fuller that he issued the bank an ultimatum.
“I’ll tear it down before I let you take it,” Hoskins told them.
And that’s exactly what Hoskins did.
3) A man in Michigan actually died during a standoff with police over his eviction from a foreclosed home….
Mark D. Fussner died May 22 after an hours-long shoot-out with police following the bailiff’s unsuccessful attempt to evict the 44-year-old homeowner. Two 24th District Court officers had come to Fussner’s home on Anne Street, in the working-class downriver Detroit suburb of Allen Park, to carry out a writ of eviction after foreclosure.
4) One very frustrated Ohio homeowner who was served with a foreclosure notice from his lender decided to drive his SUV into his home. Obviously this caused a considerable amount of damage….
30-year-old Steve Doak told deputies he was recently served with foreclosure papers and wanted to destroy the house rather than turn it over to the bank. The sheriff’s office says Doak drove the vehicle into fencing and then into the rear of the house…
5) A lot of times mortgage horror stories are 100 percent the fault of the lending institutions as in this case….
At the ripe old age of 40, my husband and I bought our first home one year ago. Having heard so many horror stories prior to our purchase, we were very surprised at the ease in which every thing went during our application and closure. We had to take out a second mortgage with our financial institution, however, to pay for incidentals at closing. We ended up with two loans, one (the smaller of the two) was automatic withdrawal and the other was a mail-in payment.
After six months, I was horror-stricken when I received a certified letter stating my home and land would be put up for auction in the near future for my failure to pay three months of house payments! After pulling myself off of the floor, I managed to calm myself down long enough to call our esteemed bank. A nice young lady laughed and said, yes, our payment had not been received for three months, but the problem was with the bank. They had “inadvertently” applied our major mortgage payments to the second mortgage AFTER SIX MONTHS OF PAYING IT CORRECTLY! I was livid! The best part? The young lady indicated that it happens all the time and it was just a little glitch … and it was usually funny (how it turned out) Funny!?! I practically had to call 911 when I got that notice! This happened five months ago and my credit is screwed up. The bank’s (explanation) is “It’s just a little glitch.”
6) Apparently some banks actually want you to default so that they can foreclose your house….
They paid the taxes on another house with a vaguely similar address (but much higher tax rate)and sent me a new payment book with my monthly amount roughly doubled to make up for the mysterious increase in tax payments. After the problem was identified, they promised to fix it, but never did, despite repeated calls from myself. Letters went unanswered.
Next thing I know, the tax people in my town are telling me that my taxes haven’t been paid and my property is delinquent. After that, Chase labels my account as past due and begins to assess late fees and threaten foreclosure. I call Chase and am automatically routed to collection people who do nothing but scream abusively at me to pay my bill.
Virtually no attorney will touch the case because they all want to keep getting business from a large financial corporation. Out of desperation, I finally contact the New York Banking Commission. Over the course of months, Chase – very, very grudgingly – corrects most of their errors. They never stop being nasty, and begin to imply that they might sue me anytime I refuse to accept their initial offer.
This process took approximately four years to complete. I eventually was forced to default on the property for a number of reasons, some of which were unrelated to Chase. At this point, I discovered that they actually WANT you to default on FHA insured properties, apparently because they make out rather well, or so my realtor claims. In any case, it was the first time they were actually very pleasant and cheerful on the phone. Go figure.
7) One man in Las Vegas says that the entire system is broken….
I bought my house in late 2007 for $400K at 6.5% fix. I put 25% down ($100K). With the current market, I didn’t only lost all my equity but due to foreclosures in the area, my house is only worth about $250K and I owe $299. I retired from the military and currently unemploy. Between my pension, spouse’s income, and others, we are barely getting by or having to use our saving to cover any shortfalls. I called Countrywide in January to see if they have anything that will help responsible people like me who are still current on payment. It was like talking to a wall. All the solutions she mentioned only benefit CW and not me. Later, I spoke to the HOPE credit counselor, we did the budget and she send the file to Countrywide. February, I send a certified letter with my budget breakdown to CW asking them to help me. Today 10 Feb 09, I called CW to discuss more about my issue. We had to go over my budget again. I asked her to pull out the letter I sent but she said she still has to do it verbally. At first her math showed I have positive income so I don’t qualify. I told her the math is not right. We tried again and now it showed I’m negative and still don’t qualify. So I asked her what is the number for me to qualify? she said because I’m already on fix 6.5% interest, I don’t qualify. So basically, no matter if I’m positive or negative, I don’t qualify period. She just wasted my time. She mentioned doing a short sale, in which I replied why not help me and modify my mortgage? They will likely loose less money helping me then taking a short sale. She said that’s the only solution the company can offer. To sum it up, if you are responsible and doing your best not to add to the foreclosure problem – THERE IS NO PROGRAM TO HELP YOU BUT ONLY PROGRAMS THAT ENCOURAGE YOU TO DUMP THE PROPERTY.
8. Dishonest Banks –
There are many claims that Franklin Financial Group, as well as Truman Foreclosure (supposedly the same company) are being investigated for dishonest practices. The company has many names as well as websites, and locations found here. Before deciding on a company, double check the internet for any complaints.
Dishonest Claim Franklin Financial Group- Truman Foreclosure Here
“Truman Foreclosure Assistance, LLC has closed it doors, after ripping me of for $1450.00, because Bank of America, my mortgage company said I was never approved for my loan modification, after Truman stated they did. I am now going to lose my home because I following there directions. Does anyone know what I can do to save my home.” Found Here
A customer wasted 3 months of valuable time with Truman group only to come out with nothing. She details (by email) the run around the company gave her about her refund. Talk about added stress that wasn’t needed- “The reason for the delinquent payment is, in part, due to Truman’s advice not to make any payments whatsoever until my case was resolved? I followed this advice and now the payment for following that advice is a second lien on the house?” “My question remains – just what did Truman do for me that warrants a $1600 payment?, I received no lower interest rate, I received no lower payment, I’m out $1600 for your ‘services’, I lost 3 months of valuable time” Check out the detailed information here
“She told me that she would be glad to help me out and that all I had to do was to fill out an on-line application for her and send it back via email. So looking up the website which again was legit, I filled out the form which listed my cell phone number and since I filled it out at my desk it also had my work email address on it. Thank GOD I did not answer any questions as to my bank account number or credit card number on the application. ……………..All I had to do was give him my credit card number or bank account information to debt the $2, 300.00 amount and then he would in turn send me a form that I was to fill out and send in to him for them to get started on my case. Needless to say I did not check with my husband at all but looked up the company on google and found the rip-off report” –Find the whole Story here
“”As weeks went by, they did not as much as contact me, so I began contacting them only to be told there was a delay with my lender.I had a hunch based on several articles I viewed online that this business was predatory and would take my money and run, so I threatened to file a complaint with the bank I used to transfer the funds.At that time (and only that time), they began calling me and promising me everything would work out fine, and it was the normal process, etc.They even advised me to discontinue making payments to my mortgage company while this process continued. …………………If you are facing mortgage trouble, please contact your bank or the help line set up by the FHA.This company tried to convince me they were a major operation, helping hundreds of people, while it was perfectly clear it’s just a fly-by-night operation scamming people in dire straights out of what’s left of their hard earned money”-Find the entire story here
Tips to Stop or Slow Down a Home Foreclosure
Much research has shown that an astounding number of people who mortgaged under a subprime loan could have qualified for much better.
Homeowners were found in a situation where credit was incredibly easy to obtain and at rates too good to pass up. Buyers often didn’t investigate the catch, they just went for it, caught up in the excitement of buying a home, renovating their homes, or purchasing the extra car, or furniture they have always wanted. Debt-ridden consumers were offered an escape route from debt, rolling up all their credit cards into one low payment.
With aggressive marketing tactics many subprime lenders are not upfront with closing costs, percentage rates and high hidden fees. Often times the fees were categorized as “other”, with fees into the thousands with no explanation.
The industry has set up their customer to fail, giving them a discount on their loan payments for the first few years and doubling it only a few years later.
Today we have millions with ruined credit, many homeless, and unable to buy a home. Entire life savings, and homes that were paid off where auctioned at the court house due to bad decisions on easy credit. Don’t be a victim, arm yourself with the information that will protect you and your family.
Mortgage modification involves alteration of the terms and conditions of a mortgage so that it becomes more affordable. It can be made more affordable by lowering the principal amount/interest rate, extending the term of the loan etc. It aims to decreasing your difficulty in making payments. Here are a few tips to keep in mind before applying for mortgage modification.
- Talk To Your Lender Over The Phone Or In Person – In order to discuss about mortgage modification, it is better that to talk to your lender over the phone or pay him a visit to have a face to face conversation. Do not try to request for a modification by sending an email or a snail mail. Keep in touch with your lender after the application process, in order to know the status of your application.
- Have Your Documents Organized – When applying for mortgage modification, you will be asked to submit pay stubs, tax returns and many other documents. Additionally, you may need to provide a “hardship letter” in which you’d have to provide explanations regarding your financial difficulties.
- Keep Your Cool – The process of mortgage modification can leave you feeling frustrated. If your application is accepted, it may take around 1-3 months or even more for the modification process to be effective.
Mortgage refinance involves substituting an existing loan with a new one which contains more favorable terms and conditions.
- Understand What You Need Before Talking With An Officer- Before going for a mortgage refinance, you should research well and find out what type of loan will be best for you. You can choose a fixed-rate loan or an adjustable-rate loan. This all depends how long you plan on staying in your home. A fixed-rate of interest is the best option if you plan on staying in your home long term. An adjustable rate of interest could work better if you plan on staying in a particular city for a short period of time. Arm yourself with all the details before speaking to the bank. Lock The Rate – Once you find a good enough mortgage refinance deal, make sure you lock the deal.
Deed In Lieu
Many homeowners who find themselves approaching a foreclosure and approached other options such as a short sale or loan modification with no success often turn to a Deed in Lieu of foreclosure, because it is the fastest way out.
A deed-in-lieu of foreclosure is when you give your home back to your lender, take your losses and keep the bank from sustaining any future losses.
- Be Ready To Provide Documentation That You Exhausted All Your Options– A DIL must be completed within 90 days of initiation of the process. The ramifications to your credit score are about the same as the short sale. Many banks will request documentation that you have tried to sell the property, to pay off the remainder of the loan. They will want to see the homeowner exhausting all the options before handing their keys over.
- Banks Will Hesitate Taking On A Deed In Lieu– As soon as the bank takes back they property, they become immediately responsible for the insurance payments, taxes, utilities, asset management, attorney fees and realtor expenses. An asset management company will be assigned to secure the property,change the door locks and ensure the property is not a target of vandalism. Appraisal companies and realtors are then hired to prepare it for resale. As you can see, with all the costs that the bank would have to put forward, they rarely entertain Deed in Lieu offers.
A Few Things To Keep In Mind With Deed in Lieu Offers
- Some banks forgive the penalties, late fees, and back payments while others peruse the homeowner for the extra fees. A bank will not consider a deed in lieu of foreclosure if there are any liens on the property. While the process is a fast solution for the homeowner, it also allows the bank the opportunity for an immediate eviction.
- Banks can hold the homeowner financially responsible for their losses when they decide to sell it on the market and get less money to cover the balance of the loan. 70% of Foreclosures are not listed on the MLS, as banks tend to hold on to properties when there is a large amount of foreclosures.
- A bank can seek a deficiency judgment on a homeowner 10 years after the homeowner has long forgotten the property. The bank can collect the remainder of mortgage by filing a deficiency judgment on the homeowner through court. A deficiency judgment does damage your credit, but in any case, avoiding foreclosure is always the best course of action that can be taken.
Options With Short Sales
Worrying about foreclose can be very difficult and stressful for most people. The most important thing is to stay calm and not crack under that pressure.
Usually the best thing you can do is talk to the lender. Lenders don’t want to foreclose because it is expensive. Most lenders will do anything possible to keep the loan alive.
A Short Sale is one great option for house owners who are left with no options other than foreclosure. They are in a situation where their loan amount is higher than what their home is appraised for. Most often, the homeowner is in a situation where they can no longer pay for their home, because of a job loss, or family problem. In the most common case, the homeowners mortgage is to blame as it resets to an unaffordable amount.
- First and foremost a short sale must be approved by the mortgage lender.
- Most banks do consider taking a short sale than a foreclosure as they figure that any money that can be gained is better than no money. They do lose money in the process, so keep that in mind when you entertain this option.
- They do need to see a hardship letter that does explain why the homeowner cannot pay their mortgage. A lender will listen to a homeowner who has had a death in the family, medical situations, or a job loss. Banks also want to see effort being made on the homeowners part, in that they are trying to exhaust every option before turning to a short sale. Banks do not like to give away money.
Reasons Why Short Sales Are Not Approved By Banks
1. The bank is often provided with incomplete information. (Financial Information, Hardship Letter, 2 Years Income Taxes, Last 2 Bank Statements, Last 2 pay Stubs, Listing Agreements, Preliminary Settlement Statement)
2. The Buyer is Not Committed– ( Buyers are not patient after a few weeks and bail, Their price is unrealistic. “take it or I am walking”, Their exit strategy is not planned, They are not qualified)
3. The Bank Loses Your Information –(They sold the loan, They changed servicers, They just lost it)
4. The Broker Price Opinion Is Too High (The PBO agent was not realistic, The bank had an agenda, Current Market value was based on sold listings vs active listings)
5. You Run Out Of Time– (An additional encumbrance was found, The lender allowed the property to go to sale, The first and second lien holders cannot reach an aggreement)
How Does A Short Sale Work?
A short sale is when a mortgage lender agrees to accept less money than the amount owed by a defaulting borrower.
Many people are under the assumption that short sales are a wholesale deals, and granted, ….they are in some cases, but not by any means bargain basement deals.
Many flippers have the perspective of using short sales a way of gathering up properties for the next major boom, which can back fire on them.
-In order for a short sale to be approved, the bank is going to want to see if the home could be sold at the remaining loan balance. The bank will want to see comparable listings in the current home price market in their neighborhood, as well as current prices of sold homes in the same neighborhood.
Understanding What Your Bank Wants To See
The biggest draw back from the investors perspective, is “jumping though the hoops” with the account representatives at the bank.
Homeowners have to investigate what their particular bank wants in documentation, as all banks have a variation of policies. The biggest challenge most homeowners document is establishing a relationship with someone at the bank’s Loss Mitigation department. Many successful real estate flippers who have made a great relationship with one person in the loss mitigation department in several banks find their accounts processed quicker.
Many loss mitigation representatives are underpaid, over worked, and frankly get pissed off when investors phone up and want bargain deals for property. The mitigation department knows that investors could potentially make thousands of dollars for little work, while the bank associates are knee deep in paper work and having a hard time paying their own personal bills.
Flippers are now finding themselves trying to form a relationship with a rep, as they can have a lot of control to approve or deny their application.
It is uncommon to find a individual looking to buy a short sale property as their long term family home.
Bank Modification Companies- Be Aware!
Most people are bombarded with information, as soon as they are in default. They receive flyer’s, and people knocking at their door with promises that are often not in their best benefit.
The best situation would be one where you have plenty of time to deal with the situation months in advance, where you are able to adjust your mortgage to a fixed rate before missing a payment. The worst situation is where a home owner has maxed out their credit cards, withdrawn their savings and RRSP’s in order to afford their mortgage. They eventually cannot keep up, and then are foreclosed on loosing all of their savings and knee deep in credit card debt.
After reading many frustrated testimonies of homeowners, there is some value in hiring a professional in the field who knows which hoops to jump through. An honest company that is able to navigate you through this process can be very valuable in saving your home.
The challenge is finding an attorney without a large retainer up front, or company that works hard after giving them your money, because the average time for a loan mod can take up to 4- 8 weeks, so every day counts.
Nightmare Testimonies From Loan Modification Companies
- “Most foreclosures today are not because of people that cannot pay for the loan they take out. It stems from It’s lies from the Banks / loan companies that claim you missed a payment etc. They then use these excuses to raise your payment beyond what you can afford to try and get more money in their pockets or foreclose since you can’t pay”- One Couple Finds Sucess under Rip Off Report- Wells Fargo Loan Modification Plan- Testimony
- “Since the day after the FC, we have been trying to contact the right person to get the Foreclosure rescinded. I have been on the phone an average of 4 to 6 hours since then trying to find someone who could correct this mistake.”
- “I was layed off my job in Feb of this year, I thought I would be able to get right back to work but after 2 months no results. I called Wells Fargoand requested the information to file for the modifacation, they said I would recieve the forms within 5 days, 6 weeks later still no forms. I called them again, 2 weeks later still no forms. I called them again and I was told they would email them to me within 48 hours, 72 hours later still no forms. Isn’t there some kind of law against this kind of thing?”” Frustrated Customer
- Wachovia Mess UP- “Last year, around Oct. 2007, after never having been late on our mortgage payment, we suddenly received a notice of intent to foreclose on our home………………” Someone finally discovered (after we had produced solid proof that payment had been made, checks cashed etc.) that, though payments were made, the money had supposedly not been applied to our mortgage due to an alleged $300 short in our escrow account, but instead had been deposited into a ‘holding account'””Wachovia still refused payment, and World demanding not only the payments we had already made, which they were still sitting on, but additional collection, foreclosure and legal fees; and yet, we still couldn’t contact them” “In the meantime, we received statements from both World AND Wachovia, though Wachovia still refused payment,………” World did not reply to our inquiries, we were unable to contact anyone at World via phone, email or mail. Wachovia still refused payment and were unable to locate our account information, despite the fact that they were sending demands for payment. After many months of emails, letters and phone calls to Wachovia, ………….they never gave us any answers. Then finally they sent us a demand for $15,000 About every other week it seemed the demand would increase by about $3000, growing further out of our reach as our business suffered while we worked trying to save our home. They sent yet another letter thanking us for our inquiry and asking for our patience while they researched the matter, stating that it could take up to thirty days. Then, just days after receiving this letter, someone taped a ‘notice of trustee sale’ from Golden West Savings to our front door, stating that our home was going up for auction in eleven days. ” Found Here
- “we filled out all the paperwork for Wells Fargo and sent it off and got denied. They added things to our monthly costs so that we were living with a deficeit they claim. They also would not include my small part time income since only my husband is on the loan.””So, WF will be happy to let us short sell which will probably be at about $165,000 on a $274,000 mortgage, but the investor says we can’t get a Mod because we have $100 too much in bills a month BEFORE a modification is done????” –Wells Fargo HAMP program Las Vegas Customer.
- “We have a sale date for 8-7-09 and IndyMac will not budge on working with us. They want $35,0000.00 in order to stop the sale date. If we had that kind of money we wouldn’t need a modification.” Find it here
Approved Loan Modification Loans
Hundreds and thousands of loan modification requests are made to banks and most of these will be denied.
You will be frustrated dealing directly with the bank or your mortgage lender over applying for a loan modification. In fact, when entertaining this option, you are asking a lot of them. They gain no profit by reducing your rate, or bettering your terms. The most common offer from banks at first is an offer of a temporary solution. Typically, a bank will offer you a change in your mortgage rate for 3 to 5 year terms
The ultimate goal before approaching a bank for a Loan Modification is to look for angles that gives you the upper hand which puts you in the position of power of negotiations.
- What LEAVERAGE is NOT– “My boss laid me off…” “I just got a divorse”, “My son had medical problems”, “My car had problems” etc, etc.
The Fed’s study found that only 3 percent of seriously delinquent borrowers – those more than 60 days behind – had their loans modified to lower monthly payments; about 5.5 percent received loan modifications that did not result in lower payments.
Adjustments which benefit the borrower are those that:
- Reduction in principal
- Lengthening of the loan term
- Capping the monthly payment to a percentage of household income
You want to a customer who is fully prepared, anticipating every question that the banking officer may ask. A combination of information and preparation is the most powerful negotiating tool in the world.
Here are some basic things to prepare in advance of a meeting with a banking officer for a bank modification loan.
1. Credit History- Have you checked your annual free score before the meeting? You can access it on line to double check any discrepancies that might exist. What credit history can you show that paints you in a responsible light? 2. Employment, 3. Residence – (Last 2 Years)
4. Current Budget- Provide the bank with a detailed current budget outlining all your finances.
- Be sure all your documents are neat, legible and organized in a cohesive and attractive manner such as a professional folder or binder. Your loan documents should be within the documentation. Handwritten documents look unprofessional, so be sure your presentation is well prepared before the meeting.
5. Second Budget With New Mortgage Adjustments- Provide a second budget showing the mortgage amount that you would like to pay and outline how this reduction will help you pay your other bills.
- Include a lot of details such as how hard you have worked to pay your bills. The more information you have, the more seriously your loan will be considered.
6. Hardship Letter- This statement of facts describes how you got into this financial bind and makes a plea to the lender to accept less than full payment. Bankers would want to know if you have planned for the major risks and how you intend to manage it.
A confident prepared borrower is more likely to have his or her loan approved than a borrower who does not know the answer to some of the basic questions a banker will be looking for.
The bank wants to deal with someone who is willing to work to keep their home and pay their bills and not someone who is looking for a handout.
How do you do that?
- An emotional person is going to look like a risk. Don’t tell him about your bills, or heart breaks, or set backs. They do not want to hear it. Do not take an apologetic or negative approach to the officer. Keep your negativity in check.
- Do not stretch the truth in your loan application. Broad, unsubstantiated statements should be avoided. The lender can easily check many of the facts on your application. If you cannot support statements with solid data, then don’t make them. Do your homework and spend time doing research to be able to support everything you say, including every single number in your projections. It is best to keep projections, assets lists and collateral statements on the conservative side.
- Do not push the loan officer for a decision. Doing so might result in a rejection. Your banker cannot make a decision until all your documentation is complete. To ensure a speedy decision, make sure that your application is complete.
- Don’t ramble giving long explanations. Simply point out what you need and the reason for the loan. People who ramble give away much more than needs to be said.
- Do your research first- Negotiate the interest rate, and be sure you have done your research first, otherwise you don’t have the ball in your court. Shop around and become knowledgeable before opening yourself up to negotiations.
Additional Points That Help
- DO dress professionally for the interview. First impressions count more than you know. If you are wearing a suit and a tie, you give the impression of someone who can be trusted.
- Point out your long-standing history with the bank, show them a employment record that amplifies your positives.
- Be Ready With A Purchase Agreement-A lender will want a copy of the offer, along with a copy of your listing agreement.
- Be Ready With A Comparative Market Analysis– The bank will want to see what has sold in your area with key information such as active homes on the market in your area, pending sales, as well as sold homes from the past six months. You can obtain a comparative market analysis (CMA)from your realitor or ForSaleByOwner.com
- Copies of Bank Statements– Your bank statements will take note of unaccountable deposits, large cash withdrawals or unusual payments or checks. The lender might want you to account for each and every deposit and or payment.
- Proof of Income and Assets– Lenders will want detailed information regarding savings accounts, money market accounts, stocks or bonds, negotiable instruments, cash or other real estate or anything of tangible value.
- Preliminary Net Sheet- Costs of a potential sale, unpaid loan balances, outstanding payments due and late fees, including real estate commissions, if any.
Produce the Note Strategy
The “produce the note” has been a successful foreclosure delay tactic for many homeowners in the legal battle over their homes.
Many lenders have been very sloppy in the re-packaging of millions of mortgages sold off into securities which were then sold all over the world. In the shuffle, some lenders are no longer in possession of the original promissory note.
By no means is this a ticket to a free ride to a free home, but rather, it can be a strategy forcing the lender to produce the note to delay foreclosure proceedings. This could give the homeowner negotiating power with the lender to negotiate the terms of the loan.
After you receive notice of default from a lender , file a request with the court, for the original promissory note. If the lender does not respond in 30 days, file a motion to compel the production of the note. This is a request where a judge can forcefully order the lender to produce the note. If the lender is required by the judge to produce the note, the lender legally has no right to foreclose the home until they produce the note. Should the judge decide against your favor, then you still bought yourself extra time as well as additional negotiations with the lender.
Consumer Warning Network makes it very easy for the homeowner to fight this battle themselves with an easy “how-to” method along with the proper forms to submit. Remember, there are many companies offering “produce the note” forms for a fee. Don’t fall for these scams. Consumer Warning Network gives you the forms and information for free.
Typical Scams Seen In The Foreclosure Process
Short Sale Scams
Banks normally do not approve “Short-Sales” as the lender often looses money in the transaction. It also can be a poor reflection of the bank in the eyes of Federal regulators when one gets processed.
-Short Sale Scam -Flippers Negotiating On Behalf Of The Owners– Short-Sales must be approved by the lender and only from the homeowner. One common illegal activity seen quite often is real estate flippers or short sale experts to negotiate on behalf of the homeowner with details of the short sale.
- Legally, the only representation allowed by law are only a select few individuals. This list includes an attorney, hired by the homeowner, a licensed mortgage broker or loan officer, a “qualified” housing counselor from a government agency, or a licensed real estate agent.
- Real estate agents often will have many extensive restrictions in order to qualify for legal representation this is because anyone can obtain a real estate license. Avoid anyone that offers to “negotiate” a short sale with exception of those broad categories listed above.
“We’ll save your credit”
“We’ll buy your house ‘as is'”
“We’ll get you a new mortgage with low monthly payments.”
-Short Sale Scam- Company Offers To Buy A Home, With The Agreement To Sell It Back At A Later Date- These companies will suggest that they pay the mortgage, and the homeowner is able to live in the home while they get their finances in order. The company takes out a loan, and wipes out any liens on the property and gives you a two-year lease with a purchase option at the end. What happens is close to closing after you have rented for some time, your rent that was once 1,000 gets pushed up to 1,500. You are left with the option to pay the amount, or default on this rent and get evicted. The scam was intended to force you to void the contract, and it gives the company “no option” to sell the property for $$$$$$. Some people don’t even fight back because they don’t know they have options. You can call a lawyer.
-Short Sale Scam-A Company Gets The Homeowner To Sign Over The Deed- A company offers a homeowner “help” by promising to pay off the loan for the homeowner. The company promises to keep the lights on, and pays the bills, and sign paperwork giving the company permission to help. The homeowner doesn’t read the fine details where they were signing over the deed to their home. How does this happen? They arrive with incredibly complicated legal documents. Don’t sign anything that has any blank spaces. Information could be added later that you didn’t agree to. Never sign a contract under pressure. Never make a verbal agreements. Always get full copies.
-Short Sale Scam– The Company Lets The House Fall Into Foreclosure– A company offers a homeowner “help” by promising to pay off the loan for the homeowner. The company makes wide promises to accommodate them through the rough time. Months go by, and the homeowner gets a letter saying the house is about to be auctioned. The company promised to take care of the bank foreclosure, when in fact they deliberately didn’t make the payments so they could be the first one in line at the auction.
-Short Sale Scam– A Company Just Takes A Fee Without Anything Else– You pay a professional company to help you solve your problems with a bank/ loan modification ect. You pay them x amount of dollars, while they waste way your valuable time, and your left in the later stages of the foreclosure process with leaving you with no options left. You ran out of time, and they got your 1,500 fee.
- Scammers are often people who describe themselves as “mortgage consultants,” “foreclosure service,”, “loan modification specialists”,”home savers”
- Scammers offer wide promises, and extravagant “guarantees.”
- Scammers collects a fee before giving any services
- Scammers advertise to people whose homes are listed for foreclosure
- Scammers often sends fliers or solicits door-to-door
- Scammers direct you to make home mortgage payments directly to them
- Scammers direct you to make your mortgage payments to their company instead of your mortgage lender.
- Scammers post signs on telephone poles for their help.
- Scammers post signs who say “we buy every home”
- Scammers hand write their advertising signs.
How can you protect yourself?
- Be informed of the state foreclosure process and make sure you know ALL deadlines for your court hearings, and deadlines for document filings
- If a homeowner does not have to pay the entire loan balance, there are usually tax repercussions as the IRS considers that a taxable event. Do talk to a qualified tax attorney who might suggest all sorts of exemptions.
- Get advice from free Non-profit housing agencies who can steer you in the right direction.
“Subject to Purchase” SCAM
A “Subject-to Purchase” transaction occurs when an “investor” is interested in purchasing a property from a homeowner without paying off the existing mortgage financing, liens and title. The investor often does not pursue financing, and typically does not close the deal with a title company or escrow agent.
- The distressed property owner often comes to the business table with the investor without knowledge of what the property is worth, therefore the investor can negotiate a “sales” price on the home for a bargain.
- After the investor and the homeowner agree on a price, the investor will typically send money to reinstate the defaulting loan.
- In exchange, the uninformed homeowner transfers title over to the investor. The existing financing and lien structure of the property remains unchanged, because it is a simple transaction where now the investor is the legal owner of the property.
- From an investors point of view “Subject-to purchase” ventures are easy ways of obtaining and flipping property, the traditional safe guards such as banking officers, real estate agents, title companies and lawyers are all taken out of the picture. Those additional people would have informed the homeowner first, and second would involve the authorites or the bank.
- Subject-to purchase” deals are sucessfully done with investors that have deep pockets who can pay for the loans without going through the traditional routes. They usually target deeply distressed homeowners who are emotional enough to accept the risky deal of leaving their loans in place in a sale. The investor improves the property, and sells it at current market prices, making a bundle on the property in little time.
How to Protect Yourself?
Get advice from free Non-profit housing agencies who can steer you in the right direction.
- A potential scammer might push you to sign paper work that you don’t fully understand. Chances are, you will not be able to view the paperwork for several days. Scammers will say anything for them to walk out your home with the papers signed in hand.
- A Scammer sets up a policy, which your mortgage payments are to be made to their company. Do not make mortgage payments to anyone other than your lender.
- Scammer will often come up with complex options to solve the foreclosure process. Scammers always present complex legal statements that are hard to understand. Talk to your attorney or title company if you need help with legal contracts. Scammers want to legally get to the money of your built up equity or anywhere the money is located. They have compromised their morals over and over again, to where they don’t care if you are out on the streets in the end.
Debt Settlement Scams
Here are some ways following which a debtor can avoid falling in trap of the debt
-Have I Checked The Agreement Properly? It is extremely important to read the documents thoroughly and check each and every terms and conditions. In case they do not understand any of the clauses, ask for an explanation from the financial consultant before signing the deal. Checking the agreement will also bring out any hidden costs or charges that you may not have been aware of.
-Is the Debt Settlement Firm Registered? The first thing that should be checked is if the debt settlement firm is a registered consultant or not. You have the option of checking the status of the firm from the Attorney General’s Office and the Federal Trade Commission before taking any decision. Another way to check the authenticity of an organization is whether it has membership with the US Chamber of Commerce, American Fair Credit Council or Better Business Bureau.
– Does the Debtor Have to Pay Upfront Fees? A trustworthy settlement firm would never charge upfront fee from the clients. On the contrary, a fraudulent firm will try to get as much as possible at the earliest opportunity. If the agents start the discussion with how much the debtor needs to pay for the consultation, it is best to end the discussion there.
Are They Asking for Personal Details? An authentic debt settlement company would only require the credit amount, the names of the creditors and the applicable interest rates. If an organization is asking for personal details like the social security number, your bank account numbers or mother’s maiden name; these are very clear red flags.
Loan Modification Attorney
Many people assume lawyers have one job, and that is to go to court to defend or try a case in front of a judge.
- The Positives- There is one really good point in hiring an attorney over a mortgage broker, and that is that an attorney is specialized in knowing the law inside and out. Attorneys know what to say and how to say it- when talking to the lender about breaches in the contract. You will be charged by the hour in some cases, and often times a set price depending on what you are going after.
- The Negatives– A person could argue that it is ridiculous to use lawyers to process loan applications, do credit checks when their specialty is creating contracts and working through legal requirements for business. Attorneys typically charge $2000 to $3500 for a loan modification.
A mortgage broker on the other hand specializes in home financing and all the aspects of banking, but only has limited knowledge about the law. The mortgage company who is successful in replacing a clients higher rate loans with better rates and terms will be compensated for the efforts, so most often they tend to work harder than a banker. A mortgage company will do a loan modification charging only state mandated fees, appraisal costs, and attorney costs for the review and signing of the contract. Typically, mortgage companies will price a loan modification anywhere between $500 and up, and $350 for attorney fees, and additional costs for an appraisal if the current appraisal is out of date.
Foreclosures can be a nightmare for a homeowner. We are so desperate to find order from those who call themselves professionals in preventing foreclosures. However, these so-called professionals can make promises they can’t keep. But how can you tell when someone is simply trying to separate you from your money?
1. Your Signature – Putting your signature to any document can bind you in ways that you may or may not want. Never be in a hurry to sign a document. If someone is pushing you to sign something without giving you a chance to read it or explaining something within it in greater detail, there is a chance they are trying to scam you. Always read every document you sign and make sure you understand just what it is you are putting your signature on.
2. Payment Acceptance – There are so-called professional services out there that set up a budget for your payments to your mortgage company to go through them. Never give your payment to anyone outside of your mortgage company. Even if the company is legitimate, paying your mortgage company directly reduces the chance of someone not receiving a payment and gives you proof you have made it in the form of a receipt.
3. Pre-foreclosure Selling Agents – Sometimes you will be approached by an “agent” who specializes in pre-foreclosure sales and can promise top dollar for your home in order to save your credit. Selling agents or brokers wind up having a great deal of power in the selling of your home and they get paid regardless of who sells it, you or them.
There are legitimate professionals out there who want to help you. Just take care of those that sound too good to be true and always research the person or company claiming they can make it “all go away.” Your home is very important to you and letting someone damage your chances of keeping it is unacceptable.
You can see a blown up version of the following chart here
Life After Foreclosure
An unfortunate reality is that millions of families have lost their homes due to home fore-closure. If you were one of them, you may think that your prospects of finding another house are incredibly bleak.
Foreclosures do impact your credit, and lending institutions will regard you as a high-risk client when you go to them following a foreclosure. That doesn’t mean your situation is hopeless. You’ll have to learn a few tricks, and you’ll probably have to tighten your bootstraps, but it is possible to acquire a house you can call your own.
Take A Deep Breath- Life Does Go On- You’ll have to find a place to rent. Renting has one major advantage: it’s cheap. That gives you a lot of leeway regarding how you spend the rest of your paycheck. It’s worth renting a house or an apartment for a year or two if it means you can pay off other debts, and feed your family without the stress of an exorbitant mortgage payment looming overhead.
Save Money- Focus on building your career so that you have more to work with. Pay off your credit cards. Read a book or take a course on debt managing your finances. Focus on doing everything in your power to make sure that when you get your next home you’ll be able to keep it. If you allow yourself to get locked into a debt cycle, you’re going to find yourself in this position over and over again.
Move On- Losing your home might seem like an apocalypse, but you can get through it. A foreclosure is never easy to deal with, and neither is the aftermath. From the emotional scars to the stress of finding a new home, foreclosure is difficult for everyone involved. The most important thing to do after a foreclosure is find a new place to live. In fact, you should try to make housing arrangements prior to the foreclosure being final. You will want to look for a rental home or apartment that is in your price range, to avoid getting in over your head once again. If you have absolutely no money for a new place, you will want to get in touch with family or friends.
Work on Your Credit Score- If you work to pay your other bills (credit cards, car loans, etc.) on time, your credit score will recover. If owning another house is anywhere in your future plans, you will need to work diligently on your credit score. Regardless if owning a home is in your future or not, you should not default on your other bills unless it is completely unavoidable. Y
Foreclosed Homeowners on IRS Radar
Just when think the nightmare of a bank foreclosure is in your past, out comes the IRS. The IRS may soon come knocking for taxes due on that foreclosed residence. You may be able to walk away from a mortgage payment, but there are lingering tax implications. Forgiveness of debt is taxable income. The IRS calculates cancelled debt anywhere from 10 to 35 percent, depending on the taxpayer’s gross income. Mortgage lenders may drag their feet, but the IRS will levy bank accounts and garnish wages if your debt is over $5,000.
How to Fix Your Credit After Foreclosure
Determine What Went Wrong- The first thing you need to do after being foreclosed upon is to examine your finances and determine what went wrong. You undoubtedly spent money on other things instead of paying your mortgage or got in over your head after job loss, medical problems, or something else that may have been beyond your control. Knowing what went wrong will go a long way in correcting the problem so it won’t happen again.
Pay Off Debt-Although this may be extremely difficult to do, you should make every effort to pay off your outstanding debt. Doing so will help repair your credit, although it could take some time to do that. In order to pay off your debt, you may have to find a way to bring more money in and spend less.
Credit Cards-You should continue to use a credit card, but only in moderation. Be careful you don’t fall back into the same spending habits that caused the foreclosure in the first place. If you lost your credit cards in the foreclosure, you should try and get a new card, even if you have to get secured card or accept a very high interest rate. Using a credit card will help fix your credit, but only if you don’t misuse it.
Give It Time- Repairing bad credit can take time. In fact, it will most likely take you a lot longer to fix your credit than it took to destroy it. A foreclosure will reflect on your credit score for years, so it should come as no surprise that repairing your credit rating will not come easy. Rebuilding your credit may call for some painful sacrifices on your part, and by your family as well. You may have to drive an old car or take public transportation instead of buying a new car. What ever steps you may have to take, drive forward and reach for the goal of re-building your credit. You can do it.