An increasing number of homeowners behind on their mortgage and facing foreclosure are finding solutions to sell despite the large inventory of homes for sale in the current market.

Their solution is called “short sales”. Short sales are similar to regular home sales except an agreement is reached in which the lender accepts what the house is appraised for or what it will currently sell for instead of what is owed on it. try to get your home marketed everywhere to sell it, even on foreclosure lists where investors are looking at potential purchases.

So a buyer who wants to pay the current market value of the home buys it from the homeowner, and the lender absorbs a loss on the difference.

With foreclosures rising to three times what they were over a year ago, lenders are more motivated to do a short sale because they at least get most of what they are owed.

Homeowners benefit too as don’t get the worst derogatory there is on their credit report which is a foreclosure. However, sellers don’t receive any equity from the sale. Although lenders absorb a loss on the money they’re owed, a short sale lets them avoid a costly home foreclosure which can sometimes cost between $30,000 to $50,000 per house in legal, marketing, and expenses not to mention advertising. A short sale will get a home off the lender’s inventory , (also known as bank repossession list) and typically costs a lender less than a foreclosure by nearly $20,000.

To be considered for a short sale by the lender, homeowners must prove they can’t pay their mortgage because of some type of hardship such as loss of job, medical expenses, death of a spouse or, in some cases, just too much debt such as an adjustable rate mortgage resets.

A homeowner’s credit score does decrease significantly but not as much as a foreclosure.

As an example, a homeowner involved in a short sale could realize a 80 to 100 point drop on their credit score. Experts say a foreclosure is around 250 to 280 points

Even when short sale is complete, homeowner aren’t out the woods, they will also have a tax hit to Uncle Sam. The tax hit is the difference between what a homeowner owes and what the bank receives for the house, and it is treated as income. This taxable income will show up on form 1099 from the lender for the homeowner. Therefore, it is recommended that you consult with a CPA or tax attorney.

Some alternatives if you want to keep the house are: 1.) you can try to rent it to a family or individual which hopefully covers the mortgage or a great portion of it; or 2.) get a Foreclosure Bailout Loan if you are close to foreclosure and short sale is not working.

Frank Collins is a editor and contributor with LoanShoppers.Net and Jumbo Mortgage Loans

WHAT IS FHA Secure

FHA Secure is designed specifically to address the needs of homeowners who are now facing inevitable foreclosure as result of mortgage payments adjusting beyond their means of affordability. WHO IS ELIGIBLE To qualify for FHA Secure, and include the delinquent loan payments, homeowners wishing to refinance must meet the following requirements:

Have a non-FHA insured ARM that has reset

Sufficient income to make the mortgage payment and

A history of on-time mortgage payments before the loan reset

Homeowners who are current on their conventional mortgages must have sufficient income to make the mortgage payment. By refinancing into a FHA insured mortgage, you can expect to pay lower monthly mortgage payments. FHA Secure can improve the quality of life for many communities by helping to reduce the number of mortgage defaults and bringing greater stability to local housing markets.

President Bush on Foreclosures

The U.S Government is finally taking action to relief homeowners with sub-prime mortgages. Experts say the initiatives are designed to ease foreclosure fears and help the economy, not to bail out lenders. In an anticipated announcement President Bush unveiled the plan that, he said, would help homeowners avoid foreclosure. The “Bush Plan” was negotiated with private lenders and it would allow some borrowers who’s interest rates are soon to rise to either refinance their loans or have their current rates frozen for five years. Bush said “it would bring more relief to more homeowners more quickly” As we take these steps, Bush added, the Department of Justice will continue to pursue wrongdoing in the banking and housing industries — so we can help ensure that those who defraud American consumers face justice. “The rise in foreclosures would have negative consequences for our economy. Lenders and investors would face enormous losses. So they have an interest in supporting mortgage counseling and working with homeowners to prevent foreclosure” the President Said. Bush was very clear when he said that the Government’s plan in no way was designed to help irresponsible buyers. ” We should not bail out lenders, real estate speculators, or those who made the reckless decision to buy a home they knew they could never afford he said. The holidays are fast approaching and unfortunately this will be a time of anxiety for Americans worried about their mortgages and their homes” said Bush. The President called on congress to do its part in providing some immediate relief. Bush said the steps were needed “so we can keep the economy healthy and the American dream alive”.

photo credit: A6U571N

If you have damaged credit from a combination of late payments, going over the limit on your credit cards, or filing bankruptcy, you may be in the market for a fresh start loan. A fresh start loan can help you find financing for purchases that you need to make while helping you to raise your damaged credit score up from the ashes.

A fresh start loan can be used for nearly any purpose. You might want to do some home improvements or remodeling, or perhaps you are in the market for new furniture or appliances. Fresh start loans are also ideal for financing your next travel adventure, or to pay for education expenses. Another great idea for the fresh start loan is to consolidate other debt – such as expensive credit card debt or past due bank loans.

Online Fresh Start Loan

There are many online lending institutions and loan servicers who can get you the best rate on your new fresh start loan. In fact, these professionals have the needed expertise to find you the right loan package that suits your funding needs while helping you rebuild a positive credit history.

To apply for your fresh start loan, you will need to visit the lender’s website. From the website, you will fill out a simple to understand application that will ask for your personal information, as well as employment history, and personal references. Once approved, you can conveniently submit any required documents such as driver’s license, paystubs, and bank statements. You can also sign your application and loan documents electronically without ever visiting the lender’s office.

Increase Your Approval Chances

A great strategy to make your application for a fresh start loan look even better is to provide collateral for the loan in the form of a home or real estate property. By letting your home stand as collateral for your fresh start loan, you demonstrate a willingness to repay to the bank that is secured by this collateral.

If you do not own your own home, you can also consider applying alongside a cosigner. A cosigner is simply a friend or relative that has a good credit standing and is employed. By signing with you on the loan application they are agreeing to pay for the loan in the case that you default. A lot of fresh start loan lenders will also release the cosigner from any liability once you establish a good payment history with them over the course of several months.

Lenders Compete for Your Business

One of the advantages of obtaining a fresh start loan over a loan from a traditional lender in a walk-in bank is that stiffer competition among online lenders can deliver you the lowest interest rate possible on your loan. By getting your fresh start loan at the best rate possible, it is easier for you to manage your payment and the chances are greater that you will pay the entire loan off sooner, which will improve your credit score dramatically.

Mary Wise is a personal loan consultant who has been associated with Bad Credit Loans and has more than thirty years of experience in finances. She has helped a lot of people to obtain Fast Unsecured Loans, home loans, car loans, unsecured credit cards and many other products regardless of their credit situation. If you want to learn more about Personal Loans you can visit her at http://www.badcreditloanservices.com

If the borrower has committed to staying in the property and fighting through the difficult period of pending foreclosure many lenders and their servicing agent are offering possible solutions. Early on, with mortgage lates, borrowers are being contacted with possible workout solutions to get caught up on their payments. However, many mortgage products with accelerating payments make it difficult for any mortgage borrower to recover. In the past, forbearance was the tool of choice to be utilized for a borrower to get caught up with payment arrears. For example, if a mortgage payment of $1,500/month is three months down and soon to be four, the mortgage company might take this arrearage of $1,500 x 4 = $6,000 and spread it out over say a years time and a catch up payment of $6,000/12= $500/month. The regular payment of $1,500/month needs to be made plus the $500/month in the forbearance portion for a total of $2,000/month to get caught up and avoid foreclosure. In the past, this might have worked, now however, many borrowers are being crippled with accelerating payments of the first of say an Option ARM, or a 2/28 ARM that is adjusting way up and forbearance won’t do the job. Rather, in many cases, a whole new loan product has to be put in place to even have a chance of rectifying the adverse mortgage situation.

Now the “old” forbearance has been modified to become even more flexible. Mortgage companies, with the current inventory of unsold homes, do not want to foreclose and end up taking an even bigger hit when and if the home sells after foreclosure. The writing has been on the wall for many lenders in this past year, work out the loan or eat huge losses. If someone is in the home and making payments, it can soften the massive write-downs that will follow in this extremely soft market.

Things were going ok for Jim and Terri until the auto accident that put Jim out of work and laid up with a broken leg and a disc problem. What savings they had were burned through in less than a month. The auto insurance covered very little of the medical bills and Jim’s insurance at work carried a sizable deductible. The biggest challenge came for their family when Jim was not able to work for what was predicted for six months. The luxury items were the first to go. Because Jim was upside down on his car that was totaled there wasn’t enough insurance settlement to pay for the debt. Jim was still on the hook for the difference and monthly payments were being demanded by the auto finance company. Jim’s attorney shared that there might be a chance for some type of settlement until he discovered the driver of the other car that had caused the accident was not insured due to a recently lapsed policy. The insurance carrier was not going to pay anything. Jim’s attorney, a high school buddy, was going after the assets of the at fault driver but it would take some time to even begin the process. Jim and Terri had worked hard for five years to buy their first home and were just getting ahead when the auto accident occurred. With several months passing, the young couple was not able to pay even the minimum payment of their four credit cards. The mortgage payment had not been made for the past three months. The phone was now ringing off the hook for medical collections, the auto finance company and the mortgage company was now threatening to foreclose. Terri took a part time job in addition to her full time job as an office manager at a collection agency. She knew that game inside out. With two kids it was becoming very clear that bad things were under way and if something didn’t happen to turn the situation around, her family would be moving back into a small apartment again with trashed credit to boot.

Fortunately, Jim and Terri’s families were close by and could help out with babysitting while Terri worked. Both of their parents were of modest means and not able to offer any financial help but were happy to pitch in with the kids and some of the maintenance work around the house. Jim was flat on his back with recovery time many months down the road. Jim had the phone close to his bed and he had been screening telephone calls for bill collectors and such. On a Friday, Jim received a call from the mortgage company that held their loan and at first Jim was going to ignore it. Jim figured he had quite enough “gut calls” for the day. The caller was in the process of leaving a message on the answering machine and was going on at length over the details of a plan from the mortgage lender that would help Jim and Terri get back on their feet. In the middle of the message, Jim lifted the phone and spoke with the caller. It was a friendly voice. Jim spent almost an hour on the phone with explaining his situation and sharing the tale of woe and their streak of bad luck.

The caller’s name was Toby and after the conversation concluded, he suggested he would call back by Monday and would give Jim and Terri a concrete proposal to try and mediate the mortgage short fall. After Jim hung up, he could only wonder if anyone could help him out of this financial mess. Sure enough, Toby called back Monday with a proposal. Toby explained his mortgage company decided to be very proactive with customers who had fallen behind and found it in their best interest to try and bridge the gap between their current situation and possible foreclosures. Another hour was spent going over Jim and Terri’s family budget just to determine the short fall and rank what items could be quickly cut to generate a better monthly cash flow. At the conclusion of the call, Toby suggested that if Jim and Terri could tighten up their budget and eliminate in the short term, cable, cell phones, eating out, sell the one remaining car that had some equity and get a transportation vehicle the bank would substantially help with the payments. This would allow Jim and Terri to bridge to a time when Jim could get back on his feet and return to work. Since the loan in question was an FHA loan, the lender was going to advance an interest free loan in the amount equal to twelve months of principal and interest payments including taxes and insurance. This was made possible by the lender making a “partial claim” to the FHA insurance fund, that is borrower funded, to help Jim and Terri get back on their feet. This was not a gift.

Every penny would need to be paid back down the road. When borrowers use the FHA program they normally pay 1.5% of the mortgage amount up front called the UFMIP (Up Front Mortgage Insurance Premium) plus they pay .5% of mortgage amount spread out among monthly payments. The bulk of these insurance premiums are by and large used for foreclosure actions. Loans that are insured by FHA pay the lender the difference of the foreclosure sale and the loan balance plus costs. This can be 25% to 30%+ loss for FHA. The thinking here by FHA is that if they can extend a hand and get these folks back on their feet in say a years time, it would be saving FHA a ton of money. This proactive approach is showing positive results. Jim and Terri seized on the proposal and in time were able to work out their financial situation and Jim was able to return to work. FHA was made whole in time; the credit card companies cancelled the accounts and agreed to take smaller payments for as long as necessary to get them settled at a reduced nominal interest rate. Terri was a good negotiator. Jim’s attorney was able to get a judgment and squeeze enough money out of the ticketed driver and get some funds from the uninsured motorist fund. This allowed Jim to payoff the “up side down” portion of the totaled vehicle with enough additional cash to buy an older pick up truck with the remainder monies.

Terri was able to give up her part time job and the family slowly pulled themselves up by the bootstraps and they got back on their feet. The trailing medical bills were negotiated down after several over charges were discovered and a low monthly payment was set up. All in all, Jim and Terri considered themselves lucky in that the mortgage company stepped forward to offer a workable plan to save their home. It could have gone the other way very easily.

Lenders have recognized that the “bottom line strategy” of trying to work with borrowers who are in trouble pays off. From specially trained customer service representatives, like Toby, who are engaged counselors and not just adversaries. A customer service representative armed with tools like forbearance plans, to reworking old loans to new loans, to FHA, Fannie Mae, Freddie Mac, all pitching in to help resolve and mitigate any salvageable financial situations. The borrowers will need to make an effort to meet the lender half way and do what they need to do to keep their home. For any homeowner, financial disaster can be just a car crash away. Fortunately, lenders are now stepping up their efforts to help families in trouble with paying their mortgage. Again, bottom line, the lender and the borrower can win.

Dale Rogers http://www.brokencredit.com

Dale Rogers is a thirty-year mortgage veteran and frequent contributor to the Broken Credit Blog. The BCB is a free website created to assist the general public with information about credit repair and responsible mortgage lending.

http://www.BrokenCredit.com

If you’ve gone through any part of the pre-foreclosure process, had a lis pendens filed against you (a notice of default – you promised to pay a mortgage, and secured that promise with the deed to the house you mortgaged), or have been harassed by the bank as their interest rates reset on your home loan, trust me, you are not alone. Millions of homeowners who have gone through or are about to go through the untimely process of having the bank try to recall a loan are probably feeling just as lost as you are right now. Here are some helpful resources to open up tons of options for you, after all, YOU are still the homeowner

Bring it on! –

Seriously, for whatever financial straits you are in, know that home ownership is the golden key to creating wealth for you and your family. 99.99% of the world’s millionaires have one thing in common: The are owners! Giving up that right is not in your best future interest. Your best interest is to sack up and deal with whatever reason it is that you came to this point. If you’ve lost your job or had an unexpected emergency, consider yourself lucky (yes, lucky), for these things are temporary and can be overcome. As it relates to your impending foreclosure, know that these are the best situation to deal with and the recovery rates for homeowners are extremely high who have only had temporary setbacks. It’s here also, that a short sale professional is most effective, that in a bit.

Why not rent? –

OK, this one deals with moving out of your home, but it relates to my last commentary about being an owner. Loss mitigators and banks who are willing to restructure the loan will still want to be paid eventually. Everything short of selling the property means you are still responsible for it. With the rental market on the rise and so many options available, renting is a plausible end-game for those who have the will to do it. First, it shows up as a performing asset on your credit report, something the banks love to see (however, typically they will depreciate around 25% your rental income as debt, they assume you’ll spend that much to maintain the property) so you’ll need to make that money as income. This will make your credit skyrocket.

How to do it? Well, one small trick that has helped me is to break down market rates by the room and rent them that way. College students, grad students, etc are a great market because typically they have roommates. Charging them by the room makes sense. So instead of taking market rate for rent for a family of 3 (lets say $900/mo in some areas), you’ll rent a 3 BR/2 BA for $400 a bedroom, giving you $1,200. If you mortgage was around $1,000/mo, you could theoretically make $200/mo which would be applied to the outstanding part of the loan. Being indebted to the bank for only a few months can cost a lot, but can be paid off quickly with $200/mo. Also, you have bought yourself a lot of time and now a short sale negotiator can help. Oh and by the way, you’ve also started the path to greater credit and you are keeping the house and MAKING IT PAY YOU. You see?

Investors -

Want to know one thing: Do you have equity in the house? There are 2 types of investors in this market, the bad and the worse (just kidding!). Investors can take the financial burden off you long enough to straighten up your finances. They can do this through many options, but they all will want a piece of ownership in your property. It’s my prediction the most popular will be leasebacks, in which an investor buys the house on a markdown from you (i.e. – takes a piece of your equity), lets you lease it from them, and then sells it back to you at a set “option” price. In this situation, buyer beware. Work with a trusted source with lots of referrals and testimonials. Most short sale negotiators are investors themselves or have a whole line of them that they feed deals to. Notice, I’ve never once said this will be free. People will make money, it’s up to you to decide if they money you are losing working with an investor is work the black credit later, the fees the bank will charge, and the financial gridlock you may be in later. Investors are full of creative options, and the most financially freeing deals I have seen are with investors. Trust a good one, and they’ll be able to work out other debt, such as car payments, medical bills, etc.

There are many ways to dealing with the bank in the event you become behind in your payments. Banks are institutions, and are governed by many rules. Trying to buck those rules (IE – ignoring the bank) will only result in more of a mess. Your best bet is to work with creative solutions such as these suggested above. Remember, I’m not a lawyer, or a bank, and I can never give you the kind of advice they may be able to, so take this as such, but know that with an acknowledgment of the rules that you’ve agreed to abide by in purchasing the home, there are creative and empowering solutions out there to help you keep your most precious investment

Chris L is an author, marketer, broker and owner of real estate in the Southeast United States. I give this information sole based on my own experiences over the last 3 years working closely with developers, land owners, renters, marketers, wholesalers, etc. If you would like any further advise or reference to things I’ve mentioned in this article, visit my foreclosure website here and leave your name and questions. Also this foreclosure guide contains all the resources you’ll need to help you out of foreclosure, and it’s 100% guaranteed to work or your money back, so, you know, it’s worth a shot.

Yes, even the IRS appears to have a heart! Did you know that you can actually be taxed on the foreclosed sale of your house? Evading tax is another good reason to try and stave off the foreclosure of your home.

If you are trying to avoid foreclosure, many realtors know solutions to house buying problems and finance, and the realtor who sold you the home may be able to offer advice. Meanwhile, the IRS is also trying to offer help and hope.

Under normal conditions, to quote the IRS, “Under the tax law, if the debt wiped out through the foreclosure exceeds the value of the property, the difference is normally taxable income.”

However, the IRS have turned out to be not quite the ogres we like to think they are, and are recently trying to help folks facing genuine hardship foreclosures. Information about this is available on the Internet, under their IRS web page, and it is surely a ‘must read’ for anyone that might lose their home.

A new section was added to the Internal Revenue Service site on September 17 this year. It is written in plain language, and it gives some very good information on the possible tax consequences of many sorts of mortgages and it also goes into foreclosures.

The foreclosure part is worth checking into, as it explains to taxpayers about how [quote] “….special relief provisions can often reduce or eliminate the tax bite for financially strapped borrowers who lose their homes.” If you are facing or have faced foreclosure this is for you!

Apart from a slew of new information, there is also a worksheet to download from the site to help home owners facing foreclosure decide whether any of the foreclosure-related relief tax-breaks will apply to them.

If you are going to be one of the unlucky ones, who will owe money, then they also provide a form on which you can request a payment ‘plan’ with the IRS. This seems a very humanitarian gesture and does reflect the responsibility that some agencies are taking toward trying to offer help in this situation.

In some cases, you may qualify for a special concession, where you can settle your tax debt for less than the full amount owing using an “offer-in-compromise.”

It is not always the case that cancellation of debt results in taxable income. For instance, the situation may be different when the debt is in the form of a non-recourse loan.

According to the IRS, “A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from foreclosure does not result in cancellation of debt income.”

So there is some good news – or rather in these sad situations it is more fitting to say that it is not all bad news.

The worksheets and examples in the new section are a particularly helpful aspect of the September 17th addition to the web site. There are also other links to other IRS publications that also offer worksheets and examples.

As a final note on the IRS – a warning about the form 1099-C (the form which is used for reporting debt cancellation to the IRS) Any taxpayers who receive one need to know that they should verify its accuracy as it is something that should be seen by anyone who is facing or contemplating foreclosure.

If you get the IRS on your side, and can arrange a payment plan, and scrape through for a few more months, perhaps the legislation of Chris Dodd’s reform bill in the Senate will change a few things; but that’s another story.

Written on behalf of Greg Ellingson. Greg is a real estate agent who specializes in Brevard County real estate. Greg is experienced and knowledgeable, and can help you find homes for sale in Brevard County.

Foreclosure can mean the loss of your home, any equity in your home, your credit rating and your dignity. Foreclosure is a very public process, with your name listed in the public court records and then published in your local newspaper. Then, once you are ready to move on with our life, your foreclosure appears on your credit report for at least 7-10 years. In addition, all mortgage applications currently ask if you have EVER had a foreclosure. You’ll have to check “Yes” for the rest of your life.

A foreclosure usually means that you won’t be able to buy another house for several years unless you agree to the exorbitant interest rates of “Bad Credit’ mortgages which can be twice the rate of regular mortgages.

But what if you’ve experienced a temporary hardship? Life is unpredictable and we all experience circumstances in our lives that are unforeseen and that are out of our control. Often times these circumstances can prevent us from making our monthly mortgage payments on time. Some of the issues contributing to delinquency include:
• Job loss
• Medical illness or injury
• Divorce
• Death in the family

If you have experienced one of these situations it can severely impact your ability to pay your mortgage obligation. If you have experienced a temporary setback, you may have several options available to you to stop foreclosure. Here are several proven strategies to avoid a foreclosure:

1. Mortgage Modification- most often used if you have experienced a permanent reduction in income and can’t afford a repayment plan. In this case, the terms of the loan may be adjusted (the interest rate is lowered or the term is extended) so that monthly payments become affordable.

2. Forbearance Agreement- typically used if you have experienced a temporary hardship that is now over and you can resume making your regular payments. A popular option when you can’t pay all of your past due mortgage payments at once. Here the lender agrees to move your delinquent payments to the back of the loan.

3. Repayment Plan- the preferred method of most lenders. Here the lender agrees to let you catch up the back payments by adding a portion of the past due amount to each current monthly payment until the account is current again.

4. Mortgage Refinance- you may elect to refinance your delinquent loan with your existing lender or a new lender if you faced a temporary financial setback, had good credit prior to the setback, and can prove that you can now support the new mortgage payment. Usually not an option in other situation unless you agree to very high interest rates.

5. Deed in Lieu of Foreclosure- here you voluntarily convey the deed to your property back to the mortgage holder in order to prevent a foreclosure. By accepting the deed, the lender releases you from personal liability on the loan.

6. Sell your Home- you may choose to sell your house prior to the foreclosure auction. Lenders may postpone the foreclosure auction to allow you time to sell the home. If you are unable to work with your existing lender, or find a new lender, then it is time to get serious about selling. The longer you wait, the more likely you will need to sell your house quickly, most likely to an investor who will buy the house as-is and close quickly, but will pay less than fair market value.

7. Bankruptcy- filing bankruptcy will temporarily stop the foreclosure case. You can file anytime before the foreclosure auction. However, this should be your LAST option, NOT your first. Though it usually does not permanently end the foreclosure, it can interrupt the foreclosure procedure and buy you months or years without losing your property. Statistics have shown however, that approximately 85% of all Chapter 13 bankruptcy filings FAIL to permanently save a homeowner from foreclosure. This is because the reorganization arrangement typically requires the homeowner to make plan payments that are much higher than the original payments that they could not afford!

Bonus- here’s 2 more!

8. Military Indulgence- if you are currently active in the U.S. military you are entitled to relief under the Soldiers’ & Sailors’ Civil Relief Act. Most lenders will not foreclose on you if you have been granted Military Indulgence.

9. Partial Claim Payment- there are a number of other programs available to you if your mortgage is FHA-insured. Under this program, HUD pays your lender the amount owed to bring your loan current. You then begin making your regular monthly payments. HUD records a 2nd mortgage against the property for the amount that they paid your lender. You do not have to pay the Partial Claim mortgage until you sell the house or the 1st mortgage is paid off.

In summary, the bottom line for stopping foreclosure is to know your rights and options; contact your lender and never ignore the lender’s letters and phone calls; and most importantly, take action immediately. Ultimately, putting your head in the sand will not make it go away.

If you would like more information on how to save your home and save your credit, get our FREE Special Report explaining your rights in much more detail. This special report reveals:
? How to raise enough cash to bring your loan current…
? How to get a new mortgage to stop a foreclosure…
? How to sell your house quickly and easily if needed…
? What to do if you feel a foreclosure can’t be stopped…
? What filing bankruptcy really does if you’re considering it…
? Several options for creating a fresh start…
? How to recognize and avoid the scam artists…

Steve Groom, http://www.HomeSolutionsMD.com is a full time Real Estate Professional in Maryland who started investing part-time in 1986. In addition to buying real estate, he consults with homeowners facing foreclosure and shares his expertise with beginning investors. To learn more about avoiding foreclosure, get your FREE Special Report entitled, “How to Stop Foreclosure & Get the Cash you Need Fast.” Call the 24-hour message line toll-free at 1-800-761-3424, ext. #21 to request it, or get it now at the website above.

A number of years ago there was a popular book entitled, “When Bad Things Happen to Good People”. Today, that could describe the nightmare of foreclosure that is facing many families.

Foreclosure can be stopped dead in its tracks before it derails you.

The first step to avoid foreclosure is to deal with the facts honestly and openly. DO NOT BE AN OSTRICH! Call or contact your lender as soon as you are aware that you will fall behind in your payments. Lenders want your money, not your home. In many cases your lender will work to help you avoid foreclosure. With foreclosures increasing every day, the last thing most lenders want is another house to dispose of. In the long run, most legitimate lenders realize that helping you to avoid foreclosure will be to their own benefit. (Lenders are not charitable institutions, however. They might view the totality of circumstances, including your long term prospects, the amount of the loan versus the equity, your payment history, etc, in a way that might accelerate the foreclosure process.) In any case, it is important to notify your lender ASAP if you want it to help you avoid foreclosure.

To Avoid Foreclosure: Important Dates

The most important date to remember when it comes to being able to avoid foreclosure is the 16th day after the mortgage payment is due. Even though the payment statement states you have until the 16th to avoid late fees, what it really means is that you have until the 16th to avoid the onset of the foreclosure process. This is how it works:

Your payment is due on the 1st.

If you miss it, then between the 16th and the 30th the lender will levy late fees and attempt to contact you. It is easy to see that if you want to avoid foreclosure, contacting the lender before they contact you can be important.

Sometime between the 45th and 60th day after the payment is missed (and possibly 2 payments) a notice in the form of a letter and possibly email goes out to the borrower. This notice tells the borrower about the breach of the mortgage agreement and gives a period of time, generally 30 days for the borrower to avoid foreclosure by paying the delinquent amount, including late fees, etc.

Between the 90th and 120th day, the loan is referred to the foreclosure department and foreclosure proceedings are started. You can still avoid foreclosure at this point or at least salvage some money, by going back to the first step above: contact your lender. You are not alone in falling behind, but the sooner you contact your lender, the more distance you put between yourself and those folks who cannot avoid foreclosure.

At this point, the state law of where your house is located becomes important. The timing of the foreclosure, the redemption period, if any, the notice provisions and other dates and procedures are governed by state law and can vary from 150 days after missing the 1st payment to 415 days or even longer. If you are caught in a foreclosure situation, please check with an attorney or other legal counsel such as local legal aid to determine what, if any, the period of time you may have to avoid foreclosure sale.

Lender Options to Avoid Foreclosure

Repayment Plan: Some lenders will agree to spread out repayment of the missed payments over some period of time to enable you to avoid foreclosure if you are experiencing or have experienced a temporary setback, such as a medical emergency other unforeseen financial problem.

Loan Modification: Mortgage lenders have the ability to adjust the terms of your loan in order to help you avoid foreclosure. Common adjustments are lengthening the amortization schedule, in other words, lowering your payments by extending the length of your mortgage. Some lenders may also allow you to roll the delinquent payments into the loan amount and reamortize the new total to avoid foreclosure. Obviously, the interest rate may also be changed.

Short Sale: This method of trying to avoid foreclosure depends on a lender willing to forgive the remainder of the debt by allowing you to sell the house for less than the debt and forgiving the balance.

Short Refinance: This is a combination of some of the debt being forgiven and the rest refinanced into a new loan.

Bankruptcy – Be Careful: The Cure Can Be Worse Than The Disease

Homeowners who are in danger of losing their homes can stop the foreclosure by declaring bankruptcy. Chapter 13 is called the home saver because filing for it stops foreclosure proceedings and allows the homeowner to stay in her or his home. However, (it seems there is always a “however” these days), a schedule of payments set out by the bankruptcy court must be adhered to or the foreclosure may be started again.

REMEMBER: Once more state law governs such issues as how much equity a homeowner can keep and what percentage of her income can be allocated for payments to creditors.

Avoid Foreclosure By Becoming A FSBO – For Sale By Owner

Selling your house by yourself can be especially helpful when trying to avoid foreclosure. The last thing you need when trying to avoid foreclosure is to pay a real estate agent’s commission.

There are 3 reasons why selling your home by yourself is especially helpful when you are trying to avoid foreclosure:

1. Economists have shown that despite what the National Association of Realtors has said, FSBO’S get more money for their homes. Why? Because FSBO’S are more motivated than realtors to get that last $1,000 or $2,000 or even more. Realtors want the deal done and a certain X amount rather than hold out for that extra.

2. While real estate agents may have more experience selling houses than you do, they have no more experience selling your house than you do; and

3. Foreclosure is a scary place to be and it also undermines a person’s confidence no matter how the threat of foreclosure came about. It would be great to be able to regain the control and confidence you deserve by taking the bull by the horns and avoiding foreclosure by selling your house by yourself.

© 2007 Complete Books Publishing, Inc.

For more information on loans, refinancing and for sale by owner, see Mortgages, Loans & Refinancing.

1. The FHA Modernization Act of 2007 was recently passed today by the Senate authorizes lenders to help borrowers who are in default.

a. lower down payments

b. Allow FHA to insure bigger loans

3. Allow FHA more pricing flexibility

Increased loan limits would also help people living in high-cost areas; current FHA limits make the program unusable for expensive areas.

2. FHASecure: FHASecure is designed for families who are good borrowers but were steered into high-cost loans with teaser rates. A HUD program program designed to provide borrowers with strong credit histories with the ability to qualify and secure new mortgages. In the first 4 months of the program, FHASecure will have helped 53,000 families and received more than 127,000 refinance applications from families whose loans are current or past due. They can be reached at 1-800-CALL-FHA

To qualify for FHASecure, eligible homeowners must meet the following five criteria:

1. A history of on-time mortgage payments before the borrower’s teaser rates expired and loans reset;

2. Interest rates must have or will reset between June 2005 and December 2008;

3. Three percent cash or equity in the home;

4. A sustained history of employment; and

5. Sufficient income to make the mortgage payment.

3. Hope Now – An alliance between counselors, servicers, investors, and other mortgage market participants to help them stay in their homes and create a coordinated plan to reach and help as many homeowners as possible. The approach here is to help people in distress by providing information and alternatives to the foreclosure process before the reset period. This is preventative medicine and a work in progress. Much more needs to be done and the alliance is continuing to develop programs. But this is America, and a deal is a deal. I dont think we will see a big bailout of homeowners that simply stretched too far.

Mortgage Company Private Initiatives: Mortgage companies are creating a fast-track program that would freeze the interest rate at the introductory rate for five years for existing ARM’s. According to the Wall Street Journal some borrowers who don’t qualify for fast-track may be able to refinance into a new mortgage, with a good credit score and equity in their home. Those that wont qualify for the fast track and do not get help on an individual basis may be able to refinance into Federal Housing Administration loans or other mortgage programs.

Other Helpful Links for Counseling Information:

NeighborWorks America: Homeownership Preservation Foundation: http://www.995hope.org/

Through our 888-995-HOPE hot line, the Homeownership Preservation Foundation has a single mission: to help homeowners avoid foreclosure. We are an independent nonprofit that provides HUD-approved counselors dedicated to helping homeowners.

MyMoneyManagement

Thanks for Reading

Howard Bell

www.yourpropertypath.com
We believe that knowledge should be free and freely shared.

Why is the foreclosure crisis so out of hand? Is it because so many people just don’t want to pay their mortgage? No. If you check the news lately on stopping foreclosure you’ll notice a common theme among homeowners facing foreclosure: Homeowners are actively seeking to stop foreclosure and save their homes. As many as 1 in 10 homeowners are facing foreclosure in major cities in the United States. Even the famous actor, talk show host, and Publishers Clearing House spokesperson Ed McMahon just had his multi-million dollar mansion go into foreclosure.

So right now foreclosure is becoming a national tragedy, because everybody always told you to build wealth you need to own your own home and thousands of homeowners now facing foreclosure from that bad advice. One of the major reasons there is this foreclosure crisis right now is because of Wall Street looking to make a buck and loose loan standards practiced by mortgage companies to loan money to future home buyers.

In 2003, Wall Street rushed to find the next big thing since the dot.com collapse, they found the ripe market of mortgage brokers, so all the fund managers of the pension funds, mutual funds and other investment vehicles rush to make money from mortgage backed securities which paid higher than treasury bills. At the same time Wall Street was enjoying unregulated, creative ways to increase business the Federal Reserve Bank also dropped the interest rate to the lowest in about four years. The tumble down effect was the mortgage brokers took advantage of this rush, advertising the interest rate to home buyers and to refinance homes; and the advertising was effective because of to the lowest interest rates ever. Buyers believed they may never get the rate again in their life time and felt urgency to cash in on what seemed too good to be true. It was. The irresponsibility came when many mortgage brokers did whatever it took to put people in their homes.

Many mortgage brokers did not verify income, loaned to subprime borrowers and ignored key indicators of likely loan failure and this all set off the foreclosure crisis. Mortgage companies put in place devices like: Interest-Only Loans and 80/20 Loans. Interest Only Loans are loans where borrowers only paid on the interest of the loan, lowering their payment, but quite literally paying nothing toward owning their home. The 80/20 Loan meant the borrower did not have to put any money down, the entire mortgage was financed.

These are just two of the so called creative home mortgages. Now when a mortgage broker faces a foreclosure on a homeowner’s property the mortgage brokers call it a write off, but a homeowner is facing a demoralizing, emotionally harsh, socially stigmatizing problem called foreclosure. What happen to the loan officer that sold the mortgage to the homeowner? He or she still keeps his or her commission from the sale and so does the mortgage broker they worked for. Their credit and reputation is fine despite their active role in making irresponsible loans. There are major mortgage brokers having problem, some on the verge of collapse, guess what they are doing right now? Begging the United States Congress to bail them out of the problem of their own creation. I find that ironic, like a child playing with a toy, then intentionally breaking it and then crying for their parents to buy a new toy after being told they have to find a way to fix the original toy. Funny thing is, many of these industry experts are trying to blame the homeowners for not staying up on their debt and paying their bills.

Right now tens of thousands of homeowners a month are trying to sell their homes because of medical problems, job loss or Adjustable Rate Mortgages coming due causing payments to double. Problem is the market is in such distress that values have hit the floor and the homeowners are forced into foreclosure because they cannot even sell their house for less than they owe due to the value dropping in some cases 30%. The mortgage industry in the rush to make money off the back of the homeowners have inflated the cost of housing so badly that homeowners owe more than the houses are worth in today’s market. Everybody was looking to make money and so, quite magically, assessments, which mortgage companies paid for, pretty much always came in at the asking price or the price on a sales contract.

The assessments, the document that mortgage companies were legally required to document a house’s worth, had inflated the worth of millions of homes, so the mortgage companies could get the sale and their staffs could get their commissions. Mortgage companies and their employees were making a bundle and homeowners who would not quality under traditional lending standards felt their dreams came true. Well that gravy train ended with a massive train wreck. Just because you’re not facing foreclosure doesn’t mean you’re off the hook, the fall out is home improvement, college, auto and other consumer loans will be harder to obtain due to tighter standards. Businesses will have a harder time obtaining a credit, leading to more layoffs and fewer jobs. This will lead to a vicious cycle of more foreclosure and possibly a depression.

MJ Jensen has studied Real Estate from the Homeowners perspective for over 20 years. Most recently due to the nature of the Mortgage crisis, he has turned his focus to techniques to keep homeowners out of Foreclosure. Go here for more tips http://www.stopbankforeclosurestips.com/free_report