Foreclosure: go it alone or get help
Foreclosure can be a difficult situation, no matter how you handle it. It can happen to any owner. How you handle the situation will determine your chances of keeping your home or losing it.
Some owners are determined to go it alone. These indomitable individuals refuse to accept help no matter how their situation is stated. Others enlist the help of foreclosure counselors, mortgage professionals, and real estate investors to navigate the troubled waters of the foreclosure process. Let’s take a look at these services and how they can help.
Foreclosure Counselors:
There are several names for foreclosure advisers. Such professionals are also known as loss mitigators, forbearance counselors, and foreclosure protection mediators. Regardless of its name, its intention is usually the same. Its sole purpose is to help you avoid foreclosure. Typical services include:
o Budget analysis to determine the borrower’s ability to stay at home.
o Educate the borrower on the timing of the foreclosure process
o Hire an attorney to defend your case against the mortgage company.
o Slow down the foreclosure process so the borrower has time to save money and make wise decisions.
oMediation between the borrower and the mortgage company.
o Negotiate with the mortgage company to achieve mutual benefit for both the borrower and the mortgage company.
When hiring these people, always check their credentials. Some questions you can ask are:
o What professional organizations do you belong to?
o Are they members of the Better Business Bureau?
o What is your rating with the Better Business Bureau? Any claim?
When looking for a company to work with, it is best to find a company locally or within your state. Since foreclosure law differs greatly depending on what state you live in, it is in your best interest to hire a company that is familiar with the laws in your area.
Mortgage professionals:
Mortgage professionals are also known as mortgage brokers, loan officers, and lenders. Your traditional lending institution does not make loans to people who are in foreclosure. However, there are mortgage professionals who specialize in subprime mortgages and make loans to homeowners in financial distress in an effort to save the owner’s home. Your goal is to save your home by refinancing your loan.
If you are refinancing your loan to avoid foreclosure, be aware that you will be charged much higher rates than your traditional lender. Since there is a much higher risk that the borrower may default on the loan, the bank must compensate for this risk. This “compensation” is achieved by charging higher interest rates and points. Also, keep in mind that most lenders will not go ahead with a refinance unless there is significant equity in your home. This is another way for the bank to mitigate riskier loans. Compare prices to get the best rates. But the most important thing is to make sure the lender can perform under the time constraints of the foreclosure process.
Real estate investors:
Real estate investors can save their home by buying it before it goes up for auction. Your goal is to buy your home in an effort to avoid foreclosure. These real estate professionals often find creative, non-traditional solutions to otherwise hopeless situations. Some typical solutions include:
o Buy the house directly in cash.
o Restart the loan and then purchase the home through a real estate contract (REC) or other “loan wrap” techniques.
o Buy the house through a short sale.
o Reinstate the loan and then lease the home to the owner with the option to buy it in the future.
Depending on the owner’s equity in the home, the real estate investor may or may not deliver cash to the seller at closing. However, the seller will be able to avoid foreclosure in most situations. This ensures a better credit rating for the borrower in the future.
There are many reputable real estate investors who can help you avoid foreclosure. Similarly, there are many unethical real estate investors who do not operate under principled business standards. When working with a real estate investor, protect yourself by asking the following:
o Names and phone numbers of previous salespeople they have worked with (references).
o Call and confirm these references to see if the Real Estate Investor performed to your liking.
o Is the real estate investor a member of the local Better Business Bureau?
o Are there other organizations that can attest to the character or ability of the real estate investor to perform in a principled manner?
Foreclosure can be a difficult and confusing process even for the experienced homeowner. However, there are many resources available to help the borrower avoid the dangers of foreclosure on their credit. The most important point in saving or selling your home before foreclosure is taking action. Time can be your greatest asset or your worst enemy. In short, while time is on your side, you are in control!