- A deed in lieu of foreclosure: In this situation the lender accepts the return of your title. Note that you should negotiate a release of the lender suing you for loss or negatively impacting your credit or reporting the uncollected difference to the IRS
- Claim advance: If you bought with less than 20 percent down then either the loan is self-insured by the lender or you have private mortgage insurance (PMI). In some cases PMI companies will provide a cash advance to bring the loan current — money which is sometimes interest free and need not be repaid for several years.
- Disasters: Most lenders, but not all, will provide substantial relief in the face of hurricanes, earthquakes and other terrible events. Typical measures include: a suspension of late fees, no late payment reports to credit bureaus, a pause in foreclosure actions and modified payment schedules. To get such benefits you must contact the lender as soon as possible after the disaster.
- FHA loans: If you financed with a loan guaranteed by the Federal Housing Administration, call 1-800-569-4287 or 1-800-877-8339 (TDD) to reach a HUD-approved housing counseling agency for assistance and advice.
- Forbearance: This is a temporary change in mortgage terms, such as the right to skip a payment or make smaller payments for a year or less.
- Modification: This option is chosen when a borrower is having problems making mortgage payments due to financial hardship. Reduction in interest rate or extending the terms of the original note may be accomplished permanently or temporarily for several years reducing payments enabling the borrower to remain current.
- Re-amortization: In this case your missed payment is added to the loan balance. This brings your account current. Borrowers most often try to lengthen the note terms instead of agreeing to larger monthly payments.
- Refunding. If you have a loan backed by the Department of Veterans Affairs, the VA may buy the loan from your lender and take over the servicing. If you have the ability to make mortgage payments, but your loan holder has decided it cannot extend further forbearance or a repayment plan, you may qualify for refunding, according to the VA.
- Reinstatement: you missed two or three monthly payments. With a reinstatement, you bring your loan current, pay late fees and other costs, and the loan continues as before.
Archive for May, 2011
Lenders have been accused of robotically signing off on thousands of verification affidavits – accused of cutting an administrative corner – but one that is a legal requirement. Summilarly, a borrower must miss six payments before a complaint is filed. To support the complaint that the mortgage hasn’t been paid, the servicer must have an affidavit that verifies the trust/lender actually owns the property and is owed six months of payments.
So this means someone at the servicing company had to personally swear on an affidavit in front of a notary that the note’s ownership had been verified and the borrower owed unpaid mortgage payments (on each & every foreclosure). As can be imagined, with hundreds of thousands of foreclosures, banks were robotically signing off on hundred of thousands of affidavits. The problem that arises is each and every file may not have been checked for who owned the note and back payments missed. Also, the notary (required for these affidavits) was often done later than when the robo-signer signed off on the complaint – sometimes months later.
However, the reality is that the borrowers signed a note, failed to make payments and will ultimately be at the risk of losing their property.
Foreclosure vs Bankruptcy – AVOIDING A FORECLOSURE
You have received a Notice of Default or a Lis Pendens – either way the lender has initiated a foreclosure against you. Many people think that they will file bankruptcy and that will wipe out any debts including the foreclosure. But the STAY of the foreclosure is only temporary!
Chapter 7 bankruptcy never permanently stops a foreclosure. It does NOT discharge debts such as taxes, child support, alimony or student loans, not secured creditors (YOUR LENDER) whose debt is secured by your home.
The automatic stay is only as effective as long as the courts wants it to stay in place. At any point the court can grant your lender’s motion for “relief from the automatic stay” which allows the foreclosure to proceed.
Alternatively, you can file Chapter 13- a way to save your home from foreclosure. Chapter 13 allows you to sit down with your creditors and arrange a payment plan to pay back what you owe over a given amount of time on a payment schedule. Once accepted, creditors must abide by the workout plan. Not everyone qualifies fyi. Furthermore, to stay out of foreclosure you must continue to make the agreed upon payments until the debt is paid off.
Potential victims are easily ascertainable – Mortgage lenders publish notices before foreclosing on homes. Lists are compiled of notices of foreclosure and distressed properties. Soon mortgage saviors pop out of the woodwork disguised as consultants, prevention specialists, etc.
Click on the link below for more information on types of scams and how to protect yourself.
Nationwide, foreclosures completed (REOs) in the first quarter of 2011 took an average of 400 days from the initial default notice to the REO, up from 340 days in the first quarter of 2010 and more than double the average 151 days it took to foreclose in the first quarter of 2007.
The foreclosure process took much longer in some states. The average time frame from initial default notice to REO in New Jersey and New York was more than 900 days in the first quarter of 2011, more than three times the average timeline in the first quarter of 2007 for both states.
The average foreclosure process in Florida took 619 days for foreclosures completed in the first quarter, up from 470 days in the first quarter of 2010 and nearly four times the average of 169 days it took in the first quarter of 2007.
The average foreclosure process in California took 330 days for foreclosures completed in the first quarter, up from 262 days in the first quarter of 2010 and more than double the average of 134 days in took in the first quarter of 2007.
Ten states accounted for 70 percent of U.S. foreclosure activity in April, led by California with 55,869 properties receiving a foreclosure filing during the month.
A total of 19,649 Florida properties received a foreclosure filing in April, the second highest state total despite a 59 percent decrease from April 2010. Florida overall foreclosure activity in April was still up marginally from a 46-month low set in February, and default notices and scheduled auctions increased from March.
Arizona tallied the third highest state total, with 13,419 properties receiving foreclosure filings in April, followed by Michigan, with 12,996 properties receiving foreclosure filings, and Nevada, with 11,761 properties receiving foreclosure filings.
Other states with foreclosure activity totals among the nation’s 10 highest in April were Illinois (10,055), Texas (8,793), Georgia (8,479), Ohio (7,962) and Colorado (4,379).
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ILLINOIS TRENDS
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33 %Data from: Realtytrac.com
Know your State’s Foreclosure Process – Judicial vs. Non-judicial
Judicial foreclosure – the foreclosure process is a legal one. It begins in a court of law by filing a Lis Pendens (which literally means “lawsuit pending”).
Non- judicial foreclosure – the foreclosure process begins by filing & recording a Notice of Default in the county recorder’s office.
| Judicial Foreclosure States | Non-Judicial States | States allowing both |
| Illinois | Michigan | Alabama (NJ more common) |
| Indiana | Tennessee | Alaska (Judicial last alternative) |
| Connecticut | Utah | Arizona (NJ more common) |
| Delaware | West Virginia | Arkansas (Both used) |
| Florida | New Hampshire | California (NJ more common) |
| Kentucky | Washington D.C. | Colorado (NJ more common) |
| Kansas | Georgia (NJ more common) | |
| New Jersey | Hawaii (Both used) | |
| Nebraska | Idaho (Trustee Sale used) | |
| Louisiana | Iowa (Trustee Sale) | |
| Maine | Minnesota (NJ more common) | |
| Maryland | Mississippi (NJ more common) | |
| Massachusetts | Missouri (NJ more common) | |
| Vermont | Montana (Trustee Sale used) | |
| South Carolina | Nevada (Trustee Sale used) | |
| New Mexico | North Carolina (JS more common) | |
| New York | Oklahoma (NJ more common) | |
| North Dakota | Oregon (Trustee Sale used) | |
| Ohio | Rhode Island (NJ more common) | |
| Pennsylvania | South Dakota (JS more common) | |
| Texas (NJ more common) | ||
| Virginia (Trustee Sale used) | ||
| Washington (Trustee Sale used) | ||
| Wisconsin (JS more common) | ||
| Wyoming (NJ more common) |
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KEY RATE INDICES |
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| Prime Rate |
3.25% |
1 Month LIBOR |
0.20% |
5 Yr US Treasury |
1.85% |
5 Yr Swaps |
1.99% |
| 12-MAT |
0.28% |
3 Month LIBOR |
0.26% |
10 Yr US Treasury |
3.18% |
10 Yr Swaps |
3.19% |
| 11th Dist COFI |
1.45% |
6 Month LIBOR |
0.42% |
30 Yr US Treasury |
4.26% |
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