I’m very excited to announce that in 2010, I will be increasing the amount donated to the V Foundation for Cancer Research with each transaction I close! With each home I sell, a donation of up to $500 will be made in memory or in honor of the person of my clients’ choosing. I truly believe cures for cancer are in reach and I hope this money puts us one small step closer to finding them.
I still find great inspiration watching Jim Valvano’s speech at the 1993 ESPN Espy Awards. I encourage you to watch it.
A Deed-in Lieu (DIL) of Foreclosure is sometimes referred to as a “friendly foreclosure” since the homeowner essentially gives the Deed back to the bank. Because this may prevent the bank from go through lengthy (and costly) foreclosure proceedings, they will sometimes forego their right to a deficiency judgment. The bank agrees to take the Deed back in exchange for the property and the homeowner and back part ways with no further recourse.
This solution often only works when there is only one bank holding a note on the property and there are no significant junior liens on the property. If the homeowner has equity, this is usually not a good route to take. Why forfeit your right to that hard earned equity?
As with other foreclosure alternatives, the bank will only accept a DIL if you cannot make your mortgage payments. Also like the other alternatives, it is often less damaging to your credit than a foreclosure. Keep in mind, the bank will not present this as an option to you because this has to be done by you voluntarily. To maximize your chances of your lender accepting a DIL, do not wait too long – approaching them one week before the home is to be auctioned will often not work.
If you or someone you know is falling behind on their mortgage, please call me at 703-403-0536 or email me at patrick@patrickduffyrealtor.com. I’m here to help!
A Loan Modification is a change to one or more of the terms of a loan. For example, this could take the form of a lower interest rate, as in going from 7.5% to 5.5%. Or, it could involve extending the term of the loan, as in going from a 30 year term to a 40 year term. Whatever the case may be, the goal is to reduce the mortgage payment to one that the homeowner can manage and allow them to maintain ownership of their home. In many cases, the lender seeks to reduce the mortgage payment to 31% of the homeowner’s before tax income. For example, if you are making $5,000 each month – the terms of your loan would be modified so that your mortgage payment does not exceed $1,550 each month.
To obtain a Loan Modification, the homeowner must exhibit a verifiable hardship that makes it impossible for them to make the payments on the current terms of their mortgage. The hardship could be one or more of many things such as job loss, illness, death, payment increase due to interest rate adjustment, etc. Much like when the homeowner applied for their mortgage, they will apply for the modification and supply the lender with needed documentation to substantiate their case for the need of a loan modification.
Once initially approved, the lender will place the homeowner on a trial modification (trials periods can range from 3-6 months) in which the homeowner will have their payment reduced and will have to exhibit that they will be able to make the payment. After the successful completion of the trial period the modification will be fully reviewed and either granted or denied.
This was a brief overview of what a Loan Modification is and the process involved. If you would like to pursue a Loan Modification, I urge you to do some research. As always, I am here to help you with alternatives to foreclosure at phone: 703-403-0536 or email: patrick@patrickduffyrealtor.com.
Links:
Forum with over 20,ooo members, sharing their loan modification stories (successes and failures) – http://www.loansafe.org
Our second foreclosure alternative to look at is forbearance (or repayment plan). Think of forbearance as reinstatement on a payment plan rather than in one lump sum. Much like the reinstatement we looked at yesterday this is a good option for homeowners experiencing a temporary hardship and the homeowner will be required to pay their lender what they are owed.
In some cases the lender will tack the missed payment and fees onto the end of the scheduled loan amortization, however it is much more likely to be given a period of time in which to pay the delinquencies. Forbearance will often require income documentation from the homeowner showing that they have the wherewithal to comply with the terms of the repayment plan.
Forbearance Example
Homeowner misses four payments on a $2000 per month mortgage and the foreclosure process has been started.
Reinstatement Amount
4 months @ $2000/mo.
$8,000
Late Fees
$400
Legal Fees
$1,600
Processing Fees
$300
Total Reinstatement
$10,300
The lender allows payments to be broken up over the next 12 months:
Total Reinstatement
$10,300
Reinstatement Pmt 12 mo.
$858
Current Payment
$2,000
Monthly Repayment
$858
Total Monthly Pmt
$2,858
Once the homeowner completes the 12th repayment, the mortgage would go back to its original amount.
NOTE: a mortgage will not be fully reinstated until the payments are made in full. If the homeowner misses just one payment along the way, they can end up in the same stage of the foreclosure process they were in prior to the forbearance plan.
In my first of a series of posts on foreclosure avoidance options, we will look at the quickest way to “get back in the good graces” of your lender – reinstatement. Unfortunately due to the homeowner’s hardship situation, it is often difficult to pursue this route. However, if the reason you have missed payments is temporary, this option allows you to reinstate your mortgage all the way up until the bank sale.
To have your mortgage reinstated, you quite simply have to pay the lender what they’re owed to bring you current. In order to due this, you will contact your lender and request the amount needed in the form of a reinstatement letter. Keep in mind this letter often is time sensitive, usually requiring the full amount in one payment within 3o days.
Once reinstated, go ahead and keep making those payments.
Reinstatement Example
Homeowner misses four payments on a $2000 per month mortgage and the foreclosure process has been started.
Reinstatement Amount
4 months @ $2000/mo.
$8,000
Late Fees
$400
Legal Fees
$1,600
Processing Fees
$300
Total Reinstatement
$10,300
As you can see, this option will often require a sizable lump sum payment. Due to the difficulty of coming up with that payment, other options may need to be explored – which will be covered in the coming days. The next foreclosure avoidance option in my series of posts will be Forbearance.
In a previous post, I provided a list of alternatives to foreclosure with a brief description of what they are. In the coming days, I will provide a closer look at each of the alternatives. Following is the list of options that we’ll delve into.
Reinstatement
Forbearance or Repayment Plan
Mortgage Loan Modification
Deed in Lieu of Foreclosure
Bankruptcy
Service Members Civil Relief Act
Sell the Property
Short Sale
Please visit my blog over the coming days to read more about these alternatives. As a Certified Distressed Property Expert, I am trained to handle this most difficult of situations, homeowners facing foreclosure. You are not alone and I am here to help you. In the meantime, feel free to call or email me anytime at 703-403-0536 / patrick@patrickduffyrealtor.com. A wealth of foreclosure resources can also be found at www.NorthernVaShortSaleHelp.com.
The last vestiges of summer have faded away, the leaves are turning into a brilliant array of color and the temperatures are dropping. All this glorious change means the holidays are coming, but it also means it’s time, once again, to look over your Woodbridge home.
With temperatures dropping and leaves falling, there are plenty of things to add to your “to do” list. Just in case your list is empty, here are a few “to do’s” to get you started on your fall Woodbridge home care:
Sealing Your Driveway – If you have a blacktop driveway, you probably already know it isn’t going to be smooth forever. The asphalt cracks, the color fades and the asphalt sags to create potholes. As winter rolls around and snow begins to fall, you’ll probably be putting down salt, which will further break down your driveway. Sealing it now, either by hiring a company to do it or sealing it yourself, can help keep your driveway smooth and beautiful.
Winterizing Your Sprinklers – Sprinkler systems do wonders in keeping your lawn green. However, leaving water in the system over the winter can cause a big, expensive mess, especially if the pipes aren’t buried below frost level. If you don’t feel comfortable winterizing the sprinkler system yourself, you can hire a professional for a very reasonable fee to make sure it’s done correctly.
Cleaning Gutters and Roofs – Everybody knows that fall brings leaves that fill your gutters and cover your roof. If you haven’t been on the roof of your house lately, now’s the time to do it. You want to make sure all the debris is gone before the snow hits, so the strength of your roof isn’t tested further. For that matter, now is a great time to install gutter guards; you’ll never have to clean your gutters again!
Preparing your Woodbridge home for the winter can be a tedious process, but the money you’ll save with proper maintenance will put a smile on your face.
If you’re looking for a home to call your own, I can help. Call me at 703-403-0536 or email me at patrick@patrickduffyrealtor.com for more information.
