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FORECLOSURE PREVENTION INFORMATION

6 METHODS TO POTENTIALLY KEEP YOUR HOME

and AVOID FORECLOSURE

1. REFINANCE

Refinancing requires income, credit and some equity for a new mortgage or deed of trust. The only reason to refinance is to lower your monthly payment. If your current income cannot pay your present mortgage, it may be difficult to convince another lender to offer you a loan with a reasonable interest rate. Refinancing in today's market is becoming less of an option. If you decide to refinance, your home must not only appraise for the amount you are trying to refinance but actually more. Many lenders will only refinance 85% or 90% of your home's value. You must have enough equity in the home to allow for the refinance and you must be earning enough without too much other debt to support the payment. If you are behind in your payments, it is unlikely that any lender will refinance you and your credit scores will drop dramatically. A score of 750 could drop to 580 with just one month's delinquency in payments.

2. REINSTATEMENT

Reinstatement is paying all past due amounts and bringing your account current. You should expect to pay about 1% of your mortgage balance if you are more than 90 days late to cover expenses such as penalties, late fees, attorney fees etc. This amount should be added to the missed monthly payments. If you are three months behind, your mortgage payment is $1000 and your mortgage is $100,000, you could have $1000 in fees and $3000 in mortgage payments or $4000 total for reinstatement.

3. FORBEARANCE

An agreement between the lender and the borrower, sometimes in writing and sometimes on a telephone call that is recorded. The delinquent amount is added to your normal monthly payment. A forbearance would only be beneficial if your ability to pay was compromised for a short period of time, i.e. you were laid off for two months and you are now back at work and able to pay more per month to make up any delinquencies.

4. LOAN PAYOFF

Payoff of the loan amount. This, of course, is a significant amount of funds and this option is seldom used. Occasionally, a family member will provide the funds. In most states, you can pay off your loan until the redemption period expires.

5. LOAN MODIFICATION

Loan modification, sometimes called loan "work out", is an option if you can negotiate a considerably lower payment or a fixed rate. If the current loan is adjustable, and the adjustments make it go higher and higher, sometimes "fixing" a rate will allow a buyer to keep their home. Most of the time, loan modifications will require you to bring some cash into the deal, the amount of cash is often about one-half of your back payments to be paid. The lender will want to see that you are able to pay, had a very good reason for getting behind in your payments that you can document, some equity in the home and that it is in the best interest of the lender to modify the loan rather than foreclose on the property.

6. BANKRUPTCY CHAPTER 13

Stop foreclosure. Debt collector's calls with stop. Protects your other property. It is a big step, costs a significant amount, and will remain on your credit report for years. Research this alot before you do it. For some people, it is a great idea. For other people, it can be a great mistake. Certainly, I am not giving advise here except to consult an appropriately specialized and experienced attorney.

4 METHODS TO GIVE UP YOUR HOME

and AVOID FORECLOSURE

1. DEED IN LIEU OF FORECLOSURE

Cancellation of the remainder of the debt in exchange for the property title. This conveys intere st in the property from the borrower to the lender. If foreclosure is unavoidable, there are no other liens, the property is not selling, then the lender would consider Deed In Lieu Of Foreclosure.

2. SALE WITH EQUITY

If there is clearly equity in the home and you are sure that it will sell for enough to pay off the loan and give you cash, consider selling it. Use a Realtor that is familiar with regular sales, short sales and foreclosures. Definitely get comps, list it with a Realtor and make sure your margin is there.

3. SHORT SALE

Selling your home for less than the mortgage balances. The lender must agree to a short sale. Homes are often worth less than is owed on their mortgages since the market has gone down. If the lender agrees to short sale. If a lender chooses to accept a short sale, there are several ways the lender can work with the shortage. Possibly a promissory note to pay the deficiency back or the lender will pursue a judgement against you for the deficiency amount or the lender may report it to the IRS in the form of a 1099.

A short sale is very complicated process. Lender approval is needed. Buyers need to be educated. Professionals need to be involved to do it as right as it can be done and for the least harm to be done to your credit and finances. Busy Bee Realty has completed Foreclosure Specialist from Foreclosure University and is one of the very few brokerages in Kentucky that can confidently comfortably professionally complete a short sale for you.

4. SELLING ON ASSUMPTION

Permitting a qualified buyer to take over existing debt. Extremely rare opportunity. Look for a "subject to transfer" clause in the loan contract to see if the loan is assumable.

ALL THE OPTIONS MENTIONED ON THIS PAGES ARE COMPLICATED AND AFTER ALL IS SAID AND DONE, EACH HAS CONSEQUENCES. DO NOT TAKE ANY OF THIS INFORMATION FOR ADVICE FOR YOU. EACH CASE IS DIFFERENT. EACH CASE MAY REQUIRE AN ATTORNEY, CPA AND/OR A BROKER. BUSY BEE REALTY IS TRAINED TO PROVIDE SERVICE IN BANK OWNED PROPERTIES, FORECLOSURE PURCHASING AND FINDING, FORECLOSURE PREVENTION

IMPORTANT DISCLAIMER:

This information is not intended as a substitute for the advice of a knowledgeable real estate attorney or CPA. This section is intended to give a very basic understanding of the foreclosure process. This process is very complex. It is not intended to teach you foreclosure information from the perspective of an attorney or CPA. Foreclosure process is dependent on continually evolving local and national legislation.