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Foreclosures In OUR Area

Last fall, my client, with a $1.0+ million home, called me and said they had gotten a Notice of Default. They negotiated a modification, but by February, they told me they received a Notice of Foreclosure with an auction date set for early March. I urged them “Let’s put it on the market, get offers, and pay off the bank and make a profit before the auction date!”

But they knew people who had been able to stay in their defaulted house for years, and thought they had time. Things are different now. They lost their house, equity and credit rating the first week in April. Banks ARE foreclosing right here, now.

I am seeing many houses in “Pre-Foreclosure” and “Foreclosure” status, many with auction dates. What should you do if you get an NOD or an auction date?

1. Realize that Banks are foreclosing; they are not going to delay indefinitely as they did in the past. The market is up so they know it will sell at auction.

2. Go online and see if you qualify for a homeowner assistance program, like FLEX, HARP, and Keepyourhomecalifornia.

3. Over 65? A reverse mortgage may be available. You stay in your house and never make another payment. Talk to your Realtor with an SRES designation or a qualified Reverse Mortgage Specialist.

4. Have you had significant income changes, loss of job, significant health issues? You may be able to negotiate with the bank to modify your loan. A Realtor with short-sale and loan modification experience may be able to help as well and should not charge for this service.

If the loan modification or negotiated plan with the bank is workable long-term, great. However, I have heard from some that they merely delayed payment for a certain number of months, then were required to pay the full amount in arrears, plus extra interest, penalties etc. and sometimes the bank raised the interest rate. Not a real solution for everyone. What then?

1. Call your Realtor, preferably as soon as you receive the NOD to explore your options. A regular sale may be possible, as prices have risen dramatically, so even if you think you can’t sell for enough to pay off the loans, you probably CAN. It’s far better to sell and at least break even than to have a foreclosure or bankruptcy on your record. Be sure the house is being actively marketed with an experienced agent to get offers and negotiate to the highest possible price.

2. If it appears that even the highest price is not enough to pay off the loans, a short sale could be a path with no monetary costs for you. Your agent should discuss this with you in the beginning, just in case.

Losing your house is one of the worst things that can happen financially. Talk to your Realtor early. We’d much rather present your options, and assist you through the process and never need to sell it, than have you lose it because you waited too long to ask for help.