Foreclosure Info

 REAL ESTATE PROBLEMS?

FACING FORECLOSURE OR OTHER FINANCIAL HOUSING ISSUES?

LET US HELP YOU AVOID OR STOP FORECLOSURE IN DALLAS-FORT WORTH!

Foreclosure is intimidating.  However, homeowners have options to consider that can lessen their exposure, or even keep them in possession of the property.  The proactive homeowner has an opportunity to forge a more favorable outcome.

Below are a number of options the homeowner has to address foreclosure.  As with all situations of this nature, it is recommended that the homeowner seek professional assistance during this critical time.  Of highest importance is communication with the lender, when attempting to avoid or stop foreclosure.  NEVER cease communication with your lender.

Remember — TIME IS VERY IMPORTANT.  The faster the homeowner takes action, the better the chances of achieving a solution more desirable than the lender selling the property “on the courthouse steps.”

ACT NOW TO AVOID OR STOP FORECLOSURE IN DALLAS-FORT WORTH!!!
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First Things First — Was the Owner Properly Notified?

Lenders must follow the law regarding notifying the owner of real property subject to foreclosure.  Certified delivery of a notice to foreclose at the owner’s most recent address known to the lender constitutes legal notification.  If the owner has not notified the lender of any change of address, the notification sent to the owner’s last known address (whether or not the owner actually receives the notification) constitutes proper notification.

If the owner is NOT properly notified, such improper notification could constitute an illegal foreclosure.  The owner could petition to cancel the foreclosure.  This is a rare occurrence, but it does happen.  Consult with a qualified real estate attorney.

Summary:  Owner can potentially delay the foreclosure process or seek relief on the basis of incorrect procedure. 

 The Good:  Cancellation of the foreclosure will provide owner valuable time to seek a more favorable resolution to the situation.

The Bad:  Use of this tactic will likely only delay foreclosure.  If owner does not address the situation, lender will likely deliver legal notice and foreclose at the next scheduled sale.  Using legal tactics to delay the sale could also make negotiations with the lender more difficult and confrontational.

Working with the Lender Avoid or Stop Foreclosure in Dallas-Fort Worth

Lenders are often anxious to work with their customers to resolve any issues with respect to their loans.  There are several ways the owner and lender can come to a satisfactory agreement to continue their relationship.  Often it’s as simple as picking up the phone.  Other times it can be much more involved and challenging.

Forbearance – An agreement reached between lender and owner that enables lender to reinstate the loan.  Usually, the owner pays an initial sum to cure the delinquency (or a portion thereof) and resumes payment of the loan at the prior terms.  Any delinquency that is not paid in the initial sum can be prorated over the remaining term of the loan, or applied to the end of the loan itself.

At this time forbearance is a less-preferred method agreement for the borrower.  Forbearance will often require an additional monthly payment in addition to the original loan payment for a period of time to cure the borrower’s deficiency.  Borrowers who have had issues making payments can’t often make payments that are higher after forbearance.

Loan Modification —  A change to the terms of the existing note.  These changes often include, but are not limited to: decreased interest payments; a re-amortization of the remaining balance; extending the loan; and/or changing the payoff amount to reflect full or partial amount of the delinquency.  Loan modification can take any form the two parties can agree to, provided the terms are legal.  WE RECOMMEND MODIFICATION AS THE MOST LOGICAL AND AFFORDABLE METHOD FOR THE BORROWER.

Summary:  The owner keeps the home, keeps paying the loan, and the owner and lender continue their customer/provider relationship.

The Good:  Owner keeps the home, and keeps foreclosure from owner’s credit. Lender keeps the owner as a customer, receives some or all of the delinquent payments owed, and can reinstate the loan in its portfolio of performing loans.

The Bad:  Because of any cash payments to reinstate the loan or to amend the loan terms, owner has more to lose financially if he/she is not able to sustain the new agreement.  Loan amounts can increase to compensate for lender’s loss of interest and penalties during the periods of non-payment.  Lender could foreclose more quickly and might be less receptive to new agreements or terms.

Refinance Existing Loan(s) —  Owner finds a lender who will issue a loan to pay off the delinquent loan.  This is possible when owner has significant equity in the property and can demonstrate to the new lender that the financial difficulties precipitating the foreclosure are temporary.

Summary:  Owner keeps property and begins new relationship with refinancing lender.

The Good: Ends a flawed relationship with the old lender and provides a fresh start for the owner.  The old lender is paid in full.  Owner retains the property.

The Bad:  Difficult to accomplish because of owner’s potentially damaged credit.  Often requires current lender’s cooperation because of the time required to secure new financing.  Closing costs could be high, requiring cash.  Starting a new loan could mean added years for owner to achieve payoff.

Borrow from New Lender to Cure Deficiency in Original Loan —  Owner locates lender who provides a new loan to cure deficiency to bring the delinquent loan current.

Summary:  Owner makes back payments and penalties to original lender, who reinstates the current loan and abandons the foreclosure process.

The Good:  Owner keeps the property under terms of the existing loan.  If necessary, provides owner with additional time to sell the property or to improve his/her financial situation.

The Bad:  Loans of this type (called Junior Mortgages) are second liens to the property, inferior to the original lien.  Junior mortgages to cure loan deficiencies are generally difficult to obtain, carry high interest rates with short terms, and are often expensive to initiate.  Owner makes payments on both loans, escalating monthly payments.  And, in the event of a future foreclosure, owner’s additional investment in the process is lost.

Bankruptcy

A legal technique for debtors to re-arrange their finances in order to ultimately pay off their debts, bankruptcy can legally stop the foreclosure process.  There are different types of bankruptcies, applicable for many different debtor situations.  Only a qualified attorney or bankruptcy specialist can assist with this technique.  Bankruptcy is one legal maneuver that can stop the foreclosure process.

Summary:  The bankruptcy court assumes a measure of control over debtor’s assets, and formulates a financing plan for the debtor to follow.  During the bankruptcy process, all creditors must cease their collection efforts.

The Good:  Provides time for owner to make arrangements for the repayment or re-establishment of the loan, or sale of the property, and can assist with other secured debts owner has.

The Bad:  Owner loses significant control of assets and bills.  Court has broad power to impose payments, budgets, and expectations of debtor.  Court can also remove certain assets, including real property, from the bankruptcy, exposing them again to lender relief techniques such as foreclosure.  Adversely affects owner’s credit for up to ten years.  Lender will usually petition the court to remove the property from the bankruptcy, making it vulnerable to their foreclosure process.

Selling the House Prior to Foreclosure is One Way to Stop Foreclosure Dallas-Fort Worth

Always a viable option regardless of the condition of the property. Selling the property solves a number of issues for the owner.  It can save the foreclosure tag from the owner’s credit (a very significant consideration in today’s lending environment).  A sale can enable the owner to leave on his schedule instead of the foreclosure official.  Owner can recover some or all of their equity in the home.

Because of time considerations, the earlier the owner can recognize the reality of a potential foreclosure, the greater the likelihood the property can sell prior to going to sale on the courthouse steps.

Retail Sale — Selling through a realtor or other selling option with the goal of receiving true retail value yields the greatest return on an owner’s equity.  This is best achieved when the owner has initiated the sales effort well ahead of the foreclosure notice.  It is most effective when the house is in good retail condition – the amenities are up-to-date and the mechanical facets of the house are in good working order.  Some lenders will cooperate with an owner trying to sell a property to satisfy the debt.  The key for the owner is communication with the lender, and an early start on the process.

Summary:  Owner attempts to sell the property to a retail buyer, assuring the highest reasonable price for the property.

The Good:  Owner can recover most or all of his equity in such a sale, pay off all obligations, and have funds to relocate.  Selling in this manner is the best option short of making the loan current and continuing to live in the property and make payments.

The Bad:  Such sales typically are time-consuming.  The typical waiting period for a retail closing is in the area of 30 days.  Inspections, loan approvals, buyers’ repair and request lists, surveys, etc. are standard requirements.  Any failing of these processes can terminate the sale.  House must be in “retail” condition – move in ready and desirable – to expect to accomplish this type of sale.

Sale to Us (OUR Specialty) –  Owner sells to a real estate professional who offers an “all-cash” sale, quick closing, and favorable terms for the owner.  For instance, our purchases are for the property in “as-is” condition – no repairs are to be made by the owner.  The owner can take what he wants when he moves, and leaves the rest to us.  We also pay all normal closing costs, and because there are virtually no lender requirements of the owner or the property, we can get to the closing table fast.  While this is a less desirable type of sale than retail, it is significantly better than putting the property in the hands of the lender to sell.

Summary:  Owner sells the property to us as it is, no repairs required, for cash.  We pay off the owner’s delinquent loan, and we close prior to the foreclosure sale.

The Good:  Owner can recover some of his equity in the procedure.  No repairs are required.  Condition of the property is not a factor in the sale.  The sale occurs prior to the foreclosure, keeping it off the owner’s credit history. Owner often has the cash to make other living arrangements in another location.  Owner can also work with the buyer to make favorable moving arrangements in terms of time.

The Bad:  Owner can expect to receive less in equity from an investor than a “retail” sale, and while owner’s obligations will be solved at the closing table, he may receive very little or no cash at all for his equity in the property.

Short Sale:  Lender agrees to accept an amount less than they are owed. Borrower is required to list the property for sale and solicit offers.  Lender reserves the right to accept or reject any offers made to owner.

Summary:  Owner lists the property for sale and entertains offers.  Lender makes the determination whether an offer is sufficient.  The loan is paid off short of the total amount owed. 

The Good: Owner relieves the burden of a foreclosure.  Lender receives an amount acceptable to them to close the file.  A spirit of cooperation exists between borrower and lender.

The Bad:  Owner loses the property and any equity.  Credit issues remain for a period of years.   

Giving Up – Walking Away

An owner who chooses this path clearly faces the least likely scenario for a positive outcome.  Even so, a surrender of the property done correctly presents some positives for a proactive owner.

Deed In Lieu of Foreclosure The owner voluntarily conveys title to the property to the lender in lieu of the lender foreclosing.  This can ONLY occur with the cooperation and at the agreement of the lender.

Summary:  Owner signs a warranty deed transferring property to the lender. Lender accepts the deed in this fashion, rendering the foreclosure process unnecessary.

The Good:  Cooperation in this fashion is looked upon favorably by the lender.

The Bad:  Because this transaction transfers any obligations (liens, taxes, judgments, etc.) placed on the property to the lender, many lenders are unwilling to perform this transaction.  When the lender does agree to this transaction, it is generally after a thorough title search of the property.  This takes time and when it fails can result, at times unexpectedly, in a very short time frame for the owner to make other arrangements.  We have also been advised that a deed in lieu of foreclosure is viewed by the credit bureau as a foreclosure.  Borrowers receive no credit relief.

Letting the Property Go to Auction – Usually the worst scenario the owner can face.  There are few positives for the owner if the property goes to the auction.  On foreclosure day, the lender offers the property for sale.  It sells to the high bidder or the lender takes the property.  The owner has lost title to the property at the end of the sale.

Summary:  On foreclosure day (the first Tuesday of the month generally held at a designated location at the county courthouse) the lender offers the property for sale.  Property sells to the high bidder or, if there are no bids at the lender’s opening bid, the lender retains the property.  Owner has lost title to the property at the end of the sale.

The Good:  Only one thing.  A lender can keep only what they are owed.  Any funds left after satisfaction of all liens is returned to the owner.

The Bad:  Owner loses the property.  Foreclosure will appear on owner’s credit report for a number of years, affecting owner’s ability to acquire credit of any kind, and to find suitable replacement housing.  Additionally, if the property sells at the sale for less than the lender is due, the lender can initiate legal proceedings to collect the deficiency from the owner.