Foreclosure Strategy: When to Walk Away…When to Run
Foreclosure options are like poker hands: some are better than others…and you have to play the hand you are dealt. Strategic default has become more popular in recent years, gaining social acceptance, transforming a ‘walk away of shame’ into a ‘smart move.’ Why spend hours on the phone with your lender when you could live in a luxury condo on cheap rent, eating out on the money you save by not having to ante upside down into a mortgage? However, what seems like a good idea in the short run may not be so ‘strategic’ in the long term. The long arm of the Office of the Inspector General (OIG) at the Federal Housing Finance (FHFA) reaches nationwide. They are coming after bad lenders and strategic defaulters alike…and they have guns. If you walk away when you could pay, you may be Wanted. (Makes ‘bankruptcy’ sound so much more attractive!) The best strategy is the well-thought-out strategy, weighing your personal and financial circumstances with your legal options to find a course that brings the best benefit to you fastest. You are not going to beat the bank and win a free house. Ultimately, the house always wins and takes your [...] Read More
Hardest Hit: Older Homeowners
Foreclosure after 50 is a triple whammy: limited income, increased medical expenses, and greater vulnerability toward foreclosure prevention/recovery scams. The younger set of homeowners are supposed to be the ones who put in too much risk and too little equity. True, more homeowners below age 50 have a higher mortgage delinquency rate than their older counterparts. However, people over 50 are a significant population, as eighty percent of them are homeowners. These people followed the model of the American dream, building equity in their home as they paid down their loan. However, in their retirement they are finding their “most valuable asset” to be their greatest albatross. In a recent report by AARP, over 1.5 million older homeowners lost their homes between 2007 and 2011, and at the end of last year, over 1 million home loans of borrowers 50 and up were either in foreclosure or 90 days or more delinquent. Furthermore, thirty-two percent of older homeowners in foreclosure have an income of $50,000 or less. Foreclosure recovery at any age is not easy. Seek competent legal counsel to review your situation and the options available to you. Read More
Sinking Into Mortgage Debt
The Titanic sank in about 3 hours. You could be on-hold that long with your mortgage lender trying to negotiate a loan modification…meanwhile a man with a suit serves you a foreclosure complaint. Most people know when they are on a sinking ship. If your house is under water in property value, you probably realize that too. Furthermore, some credit-saving devices have more buoyancy than others. If you have repeatedly missed the lifeboat of winning the lottery, now may be a good time to consider whether you are going to sink or swim. You could walk the plank of your remaining credit, but it may be a short hike. A foreclosure defense often can float you some time to pursue an alternative landing while preventing your credit from being sucked into foreclosure. Read More
The Long Run of a Short Sale for the Borrower
You have to put your credit on the altar for sacrifice in a Short Sale; however, a Short Sale is generally not as bad for your credit score as a foreclosure or bankruptcy. Thus a Short Sale is often better for the Borrower in the long run. A Short Sale is a real estate transaction where the lender agrees to accept less than the mortgage balance owed. If you owe more on your house than it is worth (Negative Equity), a Short Sale is a means of mitigating loss for the Borrower and the Lender. A Short Sale brings the most money for the property at the time, puts a new homeowner in the house (which helps to maintain property value), and lessens the loss of credit for the Borrower. Your credit is important to your future. The faster your credit score recovers, the sooner you can get on with your life and the things you need…like a car, student loan, or maybe even another house. In the short term, a Short Sale is not good for credit, but you may be better off in the long run. Seek competent legal counsel to review your specific case to determine if [...] Read More
Chemotherapy or Jail Time & the ‘Cure’ to Foreclosure
Which would you rather have: cancer or credit issues? One Florida woman tried to have the best of both worlds by faking serious illness to cure her home foreclosure. There are a lot of foreclosure treatments available, from prevention to very hard money medicine, from legitimate programs backed by the government to shady craftsmen of credit fixes, but calling in sick on your mortgage debt did not work for a Florida woman who now has 364 days in jail plus 18 months probation. She raised more than $19,000 telling friends and co-workers she had cancer, and used $14,000 to keep her home out of foreclosure. Forget negative equity—now she is habituating in the Big House in a gated community where every happy hour is surrounded by bars. There are other resolutions to foreclosure, many of which are far more legal and ethical. Consult competent legal counsel before you decide to make yourself sick over foreclosure. Read More
Take Out the Trash
Living upside-down in home equity can seem like topsy-turvy land: up is down, left is right, and everything else is wrong…but you still have to take out the trash. That great real estate investment that you call home may not be supporting you with the financial backbone you were counting on, but you have to live there…and so do your neighbors. Mow the lawn, take out the trash, and upkeep the property. Even in foreclosure, it is generally in your best interest to maintain the place. Not only does it help sustain property value of the area, but it may help you with a short sale…which could help you avoid a foreclosure on your credit. (A short sale occurs when the lender agrees to accept less than the mortgage balance.) A short sale is not the ideal situation, but it can be the best thing for the universe. It may be able to bring the most money for the property at the time…as opposed to a foreclosure or REO (Real Estate Owned). A short sale can be the best for the bank, the homeowner, and for the neighborhood. It gives the bank at least some money, it gets the homeowner [...] Read More
Short Sale – Where Less Is More
A Short Sale is a real estate transaction where the lender agrees to accept less than the mortgage balance owed. In the land of negative equity (you owe more on your house than it is worth), a Short Sale is a means of mitigating loss for the homeowner and the lender. In theory, the lender stands to lose the income on the property. If you are not making mortgage payments on the house, then some money for the lender through the sale is better than no money. Some is better than nothing. (FDIC insurance can tip the balance on this.) When the choice is between zero and less, less is more. The homeowner stands to lose credit. Regardless of whether the house goes to foreclosure or short sale, the homeowner has to leave his credit on the altar for sacrifice, but generally a short sale is not as bad as a foreclosure or bankruptcy. When the choice is between great loss and less loss, less is more. Another benefit to a short sale over a foreclosure is it helps to maintain property value in the neighborhood. Even though the house is going for less, another homeowner is moving in instead [...] Read More
Greece Trap
Greece heralded the rise of Western Civilization…and may announce its demise. Lack of capital can cause a debt ceiling collapse onto a column of bills. With debt in Olympic proportions worldwide, your foreclosure can seem like an individual-sized Greece trap. For centuries, Greece has been known for tragedy and ruin. You do not have to translate that into a personal level of Roman numerals. Just because you own a Trojan house full of negative equity does not necessarily mean that history will stampede over you. Before you sacrifice yourself to Dionysus, consider your choices…not the Fates. A foreclosure lawsuit can read like ancient Greek and be nearly as long as the Iliad. You do not need an oracle; a competent foreclosure defense attorney will do. Good legal counsel will review your case with you and discuss your possibilities, putting the power in your hands to make decisions that affect your financial future. So you have enjoyed an ouzo appetite for spending on a Greecy spoon budget, now is the time to clean out your Greece trap. Seek competent legal counsel to steer your foreclosure odyssey towards the best possible outcome. Read More