Once your bank has issued a notice of default, you have seven options to consider. Most of these options are not going to be advantageous in most situations. Please review the options below and contact me with any questions you may have or assistance you may need at 310-989-5050 cell, Rob Hanson
Option 1: Loan Forbearance or Modification - A strategy worth pursuing is called a loan forbearance. The loss mitigation department of your mortgage company may make arrangements with you to pay some of the back payments now and the balance within a certain time period. A typical example - You owe $9,000 in back payments, attorneys' fees, etc. Your mortgage company may accept $4,500 now and $750 per month for the next 6 months. Of course, you would have to resume making your normal monthly payments. A loan modification is a permanent change to your mortgage that may lower your payments and the delinquent payments may be added to the mortgage balance. A loan modification or forbearance is easier to arrange prior to the Mortgage Company filing a notice of default. Some lenders will not consider this after filing, but it's worth trying.
Option 2: Reinstate Your Mortgage - You have up to and including the morning of the auction to catch up your payments. Perhaps you could borrow from friends or family, credit cards or retirement program. You may be able to arrange a second mortgage to catch up the back payments and fees. Check in the Yellow Pages under "Mortgages". There are a number of companies listed that claim they can help in these situations or call me and I’ll refer you to somebody I’ve used for years that is trustworthy.
Option 3: Refinance - You've probably received letters from mortgage brokers and lenders saying you are already pre-approved for a new mortgage. The fact is that is very difficult to arrange new financing when you're already in default on your existing mortgage. Be very cautious about sending advanced fees of $300.00 to $600.00 to lenders or mortgage brokers. Usually it's a ploy to take advantage of your financial situation.
Arranging new financing will depend on your income, credit report, value of your home and the amount of your equity. If you're not sure of the value of your home, give me a call. Usually I can give you a fairly accurate estimate of value within 1/2 hour.
I would be glad to help and, of course, there's no obligation. If you attempt to refinance, you should always have a backup plan available to you. Many times, I have had homeowners call days before the auction saying their financing did not go through, and then it's too late!
Option 4: Chapter 13 Bankruptcy – New bankruptcy laws came into effect in October of 2005 and changed the ability to stop foreclosure proceedings and keep your home. I recommend you check with a bankruptcy attorney prior to filing any bankruptcy papers. If you decide to go this route, please call me and I’ll refer you to an attorney I’ve known for some time who specializes in these cases.
Please keep in mind, I've spoken with many individuals who filed for bankruptcy protection only to have their cases dismissed. Not only were they out their attorney's fees but now had a bankruptcy and foreclosure on their credit report. Bankruptcy is considered an action of last resort.
Option 5: Sell Your Home on the Open Market - This is probably the most under-utilized option available to you. The fact is selling your home will give you the most money in your pocket.
If you have recently been served with a notice of default you still have enough time to sell your home which will provide you the greatest amount of money to help provide a fresh start for you and your family. Even if there isn’t any equity in your home, I specialize in working with lenders to accept less than what you owe on your mortgage. No matter your situation I can help.
Don't procrastinate; explore all the options available to you. If saving your house seems unlikely, you should call me as soon as possible! Placing your home on the market a few weeks or a month from now may not give us enough time to find the buyer, arrange financing, and schedule the closing. Because of the time-sensitive nature of your situation, this is not a time to go it alone as a "for sale by owner" or list your home with a friend or friend of a friend.
You have probably been swarmed by investors calling you and knocking on your door. If not yet, you soon will be. A word of caution: some investors are very aggressive and unethical. Some investors will tell you that "You only have one or two weeks before the auction and your furniture and possessions will be placed on the sidewalk or street." This scare tactic is usually accompanied by a ridiculously low offer, or one that is switched at the last minute when you have no other options to save you from auction.
The fact is you have several months before that could happen. However, you need to start pursuing one of the options available to you that makes the most sense for you and your family. Don't be rushed or scared into giving up your home.
Please call me … I can promise that I will treat you fairly, with dignity and complete honesty. I will help you wade through your options and through the process, and will even help you evaluate offers presented to you by other lenders and investors.
Option 7: Let Your Home Be Sold On the Courthouse Steps - By far, the worst option available to you! Not only is it more damaging to your credit than a bankruptcy, a homeowner generally realizes less money and flexibility to move out. Also, most homeowners fail to recognize that investors purchase properties at auction, so letting your home go to auction to avoid investor purchase is not accurate. Let me expose your property to the market so you can get the highest offer. |