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