Stop Foreclosure with a Loan Reinstatement

Do you wish to keep your home from going into foreclosure? Thousands of people have foreclosed on homes across the nation. There are plenty of reasons for this. There are various methods to ignore foreclosure if you are serious about saying your home. These ways include forbearance, loan reinstatement, and a loan modification. The loan reinstatement is the most common way to save your home from foreclosure via bank. A lot of things you should seek when your home is going into foreclosure include: - The Foreclosure Process - Tips on Saving Your Home

The foreclosure process can take up to a year for some people. Not every home forecloses in exactly the same amount of time. This process can take six months for some homes and a year for others. When foreclosure starts a will issue a statement of claim because you have missed at least three payments on your mortgage. Your ability to service the financing of your home will be questioned. The second phase of a foreclosure is when the statement of claim is served to you. The third phase of foreclosure is the bank demanding you sell the home. This will be stated inside of the statement of claim.

A loan modification used to be the most common way to resolve the problems of foreclosure in the past. This way allows the lender to issue a new home loan agreement with you where the entire arrearages are added to the end of the loan. It would expand the life of the loan but the homeowner can continue making their payments as if they were never behind and everyone wins.

This is not a common solution anymore and banks rarely agree to allowing a homeowner have a loan modification. The loan reinstatement is another way to save your home from foreclosing. With this method, a lender can initiated the process of foreclosure and you find a way to pay back all of the missed payments, attorney costs, late fees, etc. These amounts must be paid back in full and zeroed out in order for it to be valid.

There are lots of positive aspects of loan reinstatement you might consider. These include being able to keep your home without the worry of losing it to a foreclosure. You are back at square one with your monthly mortgage payments. You are not behind and you don’t owe any additional money for late fees or anything else. It can be the perfect way and banks are generally willing to accept this way if you can come up with repayments to catch up.

Consumer Bankruptcy and Foreclosure

As popular as bankruptcy is today, it's nothing new, going at least all the way back to the Bible's Book of Deuteronomy, which simply states: "At the end of every seven years you must cancel debts." If only it were that divinely simple.

All these centuries later, a bankruptcy filing still offers forgiveness for many debts, or at least provides a payment plan to make them more affordable. But rules and regulations can rain down on an applicant like a plague of frogs.

Bankruptcy can be a highly effective tool for getting back on your financial feet. But it's a serious step with long-range consequences, and financial advisers generally say it should be considered only as a last resort. Used unwisely, it can do more harm than good.

Keep in mind another, more sobering quote from Deuteronomy: "There will always be poor people in the land."

Several types of bankruptcy are available, but most consumers file under Chapter 7 or Chapter 13.

These two bankruptcy flavors are markedly different in how they work and in their outcomes.

Generally speaking, Chapter 7 is for people so mired in debt that there's little chance they'll ever be able to pay what they owe. If the filing comes to a successful conclusion, many of the most crippling debts - including those owed to credit card companies - could be erased and a fresh start begins.

However, that fresh start might be without car, home and other key possessions. Although much is protected in a Chapter 7 bankruptcy, the court trustee who oversees a filing has the right to seize some belongings and turn them into cash for creditors.

A Chapter 13 filing, sometimes called a wage-earner bankruptcy, is more complex. It's for people who can pay what they owe - or at least some of it - but need extra time to make good on the debts.

One of the main reasons to use a Chapter 13 filing is that it can stop a foreclosure. This type of bankruptcy demands not only a steady income but also the discipline to stick with a court-approved payment plan for several years. Only about a third of Chapter 13 filings are seen through to completion.

No matter which type of bankruptcy is filed, there's one common key to a successful outcome. Just as your mother taught you: Honesty is the best policy, and not just for moral reasons. The people that work in this field are very good at detecting an avoidance of the truth.

If you're caught fudging the numbers or trying to hide property, a bankruptcy can be canceled, possibly leaving you in worse financial shape than when you filed. There's a much better chance of being caught at this than being caught cheating on your taxes.

Foreclosure help for Miami-Dade families

Miami, Florida, like many other US cities, is suffering from a drastic rise in home foreclosures. According to foreclosure filing statistics from the Miami-Dade County Clerk of Courts , county foreclosures in 2009 are up 62% since last year.

Besides Help for Homeowners Program and Homeowner Affordability and Stability Plan offered by the Federal Government, the City of Miami's Department of Community Development Foreclosure Program is assisting eligible, low income homeowners that are facing foreclosure within the city limits

The program will supply qualified applicants with $7,500 to assist homeowners pay for late fees and delinquent payments associated with their home mortgages.

The program is only available to property owners that posses one property and, if eligible, are receiving foreclosure prevention counseling from a HUD-certified counseling agency. There are six other qualifiers home owners must meet to be eligible for this program. To view the complete list of requirements visit the City of Miami website .

Applications are currently available at the Department of Community Development, 444 SW 2nd Ave., Second Floor, Miami, FL 33130 and on the web for downloading at:

www.miamigov.com/communitydevelopment

Applications will be accepted at the Department of Community Development. Assistance will be provided on a first-come, first-ready, first-served basis. For additional information on the program, please call 305-416-2016 or 311.

Foreclosures Predicted to Soar in California

California is about to get hit by another foreclosure wave.

Pre-foreclosure notices in the state jumped by 80% in the first quarter of 2009 from the previous quarter, according to a new report from DataQuick Information Systems of San Diego, a sign that foreclosures in California will rise sharply in the coming months.

Foreclosure moratoria and a state law that slowed down foreclosures had artificially depressed new foreclosure filings at the beginning of the year. The newest data shows how those foreclosures are wending through the system as lenders play “catch-up.”

Some 135,000 default notices were sent out in the first three months of the year, an 80% increase from the fourth quarter of 2008 and a 19% increase from the previous year period. That’s higher than any quarter DataQuick has measured since its tally began in 1992.

The DataQuick report also found that foreclosure activity was spreading out from the state’s most affordable (and batteredOK?) inland regions, reaching areas that have been less affected to date. Those affordable housing markets, which have 25% of the state’s housing stock, accounted for 47.5% of all default activity during the quarter, down from 52% last year. Notices of default jumped by 40%, for example, in San Luis Obispo County on the central California coast. Defaults were up by 38% in Los Angeles County and by 35% in San Francisco.

Mortgages made in 2006 were the most likely to trigger a default notice, and those loans had a 8.5% default rate. Loans made in 2005 had a 4.9% default rate, while those made in 2004 had a default rate of less than 1%.

Texans could get more time for homes in foreclosures

Texans who fall behind on their mortgage payments would get more time to try to save their homes under legislation approved by the Texas Senate.

Under current law, Texas homeowners have just 20 days to cure a loan default before lenders foreclose on them. It is one of the shortest foreclosure notice periods in country.

The bill approved Friday, a top priority of Attorney General Greg Abbott, would extend that period to 45 days. The bill passed unanimously and now moves to the state House.

Foreclosure Bailout Information

The government's foreclosure bailout program, unveiled on Wednesday, February 18th, doesn't start until March Fourth. At that time it's up to the homeowner to contact their lender. And that's when lenders start taking applications for loan modifications.

In the meantime, gather the paper work like you would with any refinancing and do what housing counselors are doing ... learn all you can about the program.

The government program is meant to stop home values in the Tri-State and nationwide from falling. The help is for people behind on their payments and even those who aren't behind but are at risk of that happening.

An offer of an interest rate reduction or even principal reduction could be the catalyst behind making things "better". It could help many two income families that are now one income due to job loss.

In general you qualify if your mortgage payment is greater than 31 percent of your gross monthly income. It's voluntary on the part of lenders but the program also allows for bankruptcy judges to modify mortgage terms and that may be motivation.

This program isn't for homeowners already in foreclosure, "It's likely that if you're already in foreclosure this may have a spillover effect to improve the modifications we can get."

Housing counselors understand the frustration of homeowners who aren't in need of mortgage help and see tax money used on others but point out if your neighbor's home is in foreclosure your home value drops by thousands.

"The government today said $6000, but studies in Hamilton and Clermont say it's $10,000."

This isn't for people who just want a better interest rate. But if you do qualify for the program and haven't been late on your payments, I've been told loan modification should not impact your credit rating.

Finally, if this program might be for you consider having a housing counselor walk you through it. Call 211 for a referral.

Contact Your Lender Immediately

Many people avoid calling lenders about money troubles because we:

1) Feel embarrassed discussing money problems with others.

2) Believe that if lenders know we are in trouble, they will automatically rush to a collection agency or foreclosure (seize property for failure to pay a mortgage debt).


But lenders want to help borrowers keep their homes because:

1) Foreclosure is expensive for lenders, mortgage insurers and investors.

2) HUD and private mortgage insurance companies and investors like Freddie Mac and Fannie Mae require lenders to work aggressively to help borrowers facing money problems.


Lenders have workout options (choices) to help you and:

1) These options work best when your loan is only one or two payments behind.

2) The farther behind you are on your payments, the fewer options are available .


Don't assume that your problems will quickly correct themselves:

Don't lose valuable time being overly optimistic.

Contact your mortgage lender to discuss your circumstances as soon as you realize that you're unable to make your payments.

Look forward to your lender being willing to explore many possible solutions, without guaranteeing any one particular solution.


Finding Your Lender

Check the following sources to contact your lender:

Your monthly mortgage billing statement

Your payment coupon book

Information to have ready when you call:

Your loan account number

A brief explanation of your circumstances

Recent income documents:

+ Pay stubs

+ Benefit statements from Social Security, disability, unemployment, retirement, or public assistance

+Tax returns or a year-to-date profit and loss statement, if self-employed

+A list of household expenses

Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.

Explore Solutions With Your Lender

First and foremost, if you can keep your mortgage current, do so. But if you find you are unable to make your mortgage payments, you might qualify for a loan workout option. Check with your lender to see which option may be available. Some options may not apply to your loan if it is not insured by FHA.

If your problem is temporary - call your lender to discuss these possibilities:

Reinstatement: Your lender is always willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option.

Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time. The money might come from a hiring bonus, investment, insurance settlement, or tax refund.

Repayment plan: You may be able to get an agreement to resume making your regular monthly payments, plus a portion of the past due payments each month until you are caught up.

If it appears that your situation is long-term or will permanently affect your ability to bring your account current - call your lender to discuss options:

Mortgage modification: If you can make payments on your loan, but don't have enough money to bring your account current or you can't afford your current payment, your lender may be able to change the terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways:

1) Adding the missed payments to the existing loan balance.

2) Changing the interest rate, including making an adjustable rate into a fixed rate.

3) Extending the number of years you have to repay.

Partial Claim: If your mortgage is insured, your lender might help you get a one-time interest-free loan from your mortgage guarantor to bring your account current. You may be allowed to wait several years before repaying this loan. You qualify for an FHA partial claim if:

1) Your loan is between 4 and 12 months delinquent

2) You are able to begin making full mortgage payments again

When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must sign a promissory note, and a lien will be placed on your property until the promissory note is paid in full.

The promissory note is interest-free and is due when you pay off the first mortgage or when you sell the property.

Prioritize Your Debts

You will need a new, tightened budget if you lose a job. Prioritize your bills and pay those most necessary for your family: food, utilities and shelter.

Failing to pay any of your debts can seriously affect your credit rating, but if you stop making your mortgage payments you could lose your house. Try these suggestions to keep your home:

1) Whenever possible, use any income available after paying for food and utilities to pay your monthly mortgage payments.

2) If your employment income has stopped or been reduced, first consider getting rid of or cutting back on other expenses (such as dining out, entertainment, cable, or even telephone services).

3) If you still do not have enough income, consider cashing out other financial resources like stocks, savings accounts, or personal property that may have value like a boat or a second car.

4) Take any responsible action that will save cash.

Besides speaking with your lender, you may want to contact a nonprofit consumer credit counseling agency that specializes in helping restructure credit payments. Credit counselors can often reduce your monthly bills by negotiating lower payments or long-term payment plans with your creditors. Trustworthy credit counseling agencies provide their services free of charge or for a small monthly fee tied to a repayment plan. Beware of credit counseling agencies that offer counseling for a large upfront fee or donation.

For consumer debt advice, contact www.debtadvice.org

When you call a credit counseling agency, they will ask you to provide current information about your income and expenses. Make sure you ask if the agency has a charge before you sign any documents!

Other Foreclosure Possibilities

Sale: If you can no longer afford your home, your lender will usually give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to use the services of a real estate professional who can aggressively market the property.

Pre-foreclosure sale or short payoff: If you can't sell the property for the full amount of the loan, your lender may accept less than the amount owed. Financial help may also be available to pay other lien holders and/or help towards some moving costs.

You may qualify if:

1) The loan is at least 2 months delinquent

2) You (or your real estate professional) can sell the house within 3 to 5 months

Assumption: A qualified buyer may be allowed to take over your mortgage, even if your original loan documents state that it is non-assumable.

Deed-in-lieu of foreclosure: As a last resort, you "give back" your property and the debt is forgiven. This will not save your house, but it is less damaging to your credit rating. This option might sound like the easiest way out, but it has limitations:

1) You usually have to try to sell the home for its fair market value for at least 90 days before the lender will consider this option

2) This option may not be available if you have other liens, such as other creditor judgments, second mortgages, and IRS or state tax liens

Predatory Foreclosure Lending Scams

Most mortgage lenders are trustworthy and provide a valuable service by allowing families to own a home without saving enough money to buy it outright. But dishonest or "predatory" lenders do exist and engage in lending practices that increase the chances that a borrower will lose a home to foreclosure. Beware especially of those who make high risk second mortgages. Other abusive practices include:

Making a mortgage loan to an individual who does not have the income to repay it.

Charging excessive interest, points and fees.

Repeatedly refinancing a loan without providing any real value to the borrower.

Borrowers facing unemployment and/or foreclosure are often targets of predatory lenders because they are desperate to find any "solution". Homeowners receive many refinance offers in the mail saying they are "pre-approved" for credit based on the equity in their homes. Borrowing against your house may seem attractive when you are struggling to pay your mortgage and other bills. But stop and think about this: if you can't make your current payments, increasing your debt will make it harder to keep your home, even if you get some temporary cash.


Beware of scams

Equity skimming: In this type of scam a "buyer" approaches you offering to repay the mortgage or sell the property if you sign over the deed and move out - usually leaving you with the debt and no house. Signing over your deed does not necessarily relieve you of the responsibility of paying the loan.

Phony counseling agencies: charging for counseling that is often free of charge. If you have any doubt about paying for such services, call a HUD-approved foreclosure housing counseling agency toll free at (800) 569-4287 or TDD (800) 877-8339 before you pay anyone or sign anything.


Do not sign anything you do not understand. It is your right and duty to ask questions

Information is your best defense against becoming a victim of predatory lending, especially for a desperate homeowner

Where to report suspected predatory lending:

Homeowners can either visit the Stop Mortgage Fraud website or call toll free (800) 348-3931 to get information on what steps to take to file a complaint. Homeowners who call will also receive a booklet containing information found on the website.

FDIC Announces Foreclosure Consumer Help Plan

Publicly breaking with the Bush administration's official stance, the Federal Deposit Insurance Corp. proposed on Novebmer 11, 2008, to use $24 billion in government funding to help 1.5 million American households avoid foreclosure.

Where to find that money, though, is in dispute. FDIC officials want to use part of the $700 billion bailout of the financial industry to pay for it. But the Treasury Department is opposed to that idea.

Testifying on Capitol Hill Friday, Neel Kashkari, the Treasury Department's assistant secretary for financial stability, said the aim of the $700 billion plan was to make investments with the hope of getting the money back. That he said, was "fundamentally different from just having a government spending program" that would disburse money with no chance of ever seeing any returns.

With the Bush administration adamantly opposed, Congressional Democrats could take up the FDIC's plan when they return for a lame-duck session next week. Or Bair's plan could set the stage for a new foreclosure prevention initiative once President-elect Barack Obama takes office in January.

There is intense speculation in Washington that the FDIC's chairman, Sheila Bair, is positioning herself for a role in the Obama administration. "My assumption is that she's angling for a promotion," said Bert Ely, a banking industry consultant in Alexandria, Va. and an FDIC critic.

The agency's plan, posted on its Web site Friday, would guarantee 2.2 million modified loans — mainly risky loans made to borrowers with weak credit or small down payments — through the end of next year. Borrowers would get reduced interest rates or longer loan terms to make their payments more affordable.

"If we can avoid those foreclosures, then you will get more stability in the housing market," said Michael Krimminger, a senior adviser to FDIC Chairman Sheila Bair, in an interview Thursday.

The FDIC says the government's backing will make the lending industry more willing to modify loans because taxpayers will absorb half of the losses if the borrower defaults again. Also, loan servicing companies, which collect and distribute mortgage payments, would be paid $1,000 for each loan they modify.

Even if a third of borrowers default again on their modified loans, 1.5 million homes would still be saved, the FDIC says. Under the agency's plan, monthly payments shouldn't total more than 31 percent of homeowners' pretax monthly income.

The FDIC says its plans should apply to an estimated 4.4 million loans that are likely to become delinquent though the end of next year. That estimate excludes loans held by mortgage finance companies Fannie Mae and Freddie Mac, which on Tuesday launched their own loan modification program modeled after the FDIC's effort at failed IndyMac Bank.

The agency has been an aggressive proponent of efforts to alleviate the foreclosure crisis. FDIC officials sounded early warnings about a rise in defaults among risky loans, and have repeatedly reaped praise from Congressional Democrats.

After taking over failed IndyMac Bank of Pasadena, Calif over the summer, the FDIC launched a loan modification plan in which borrowers receive interest rates of about 3 percent for five years. That plan was used as a model for a loan modification plan announced Tuesday by mortgage finance companies Fannie Mae and Freddie Mac.

Both of those plans reduce interest rates so borrowers aren't paying more than 38 percent of their pretax income on housing expenses.

Lenders look to avoid Bank Foreclosures

Among the many harsh lessons for mortgage lenders in the real estate bust is this one about evictions: Selling a house is far easier than taking it back. Clever opportunists and struggling families have figured this out, too, and the result is a rapidly evolving free-for-all.

Defaulting homeowners are taking advantage of banking chaos to live mortgage-free for six months or longer, dragging out the eviction process, according to lenders and real estate agents. Unscrupulous landlords are collecting rent but withholding mortgage payments, leaving a rude surprise for their tenants when repossession comes. And banks are so eager to avoid the hassle of eviction that they are paying occupants $5,000 or more simply to hand over the keys and move out without a fight.

The economy has prompted many homeowners to stop paying their mortgages, telling banks that they want to negotiate a short sale, through which the bank does not foreclose but agrees to accept the proceeds of a sale of the property for less than the amount of the loan. With banks' loss-mitigation departments inundated with foreclosure cases, the process can grind on for six months or more, according to real estate agents and homeowners, and often ends in foreclosure anyway.

Each foreclosure costs a bank $40,000 to $50,000 in attorney's fees and fees for property management and other services. Lenders are willing to go to great lengths to avoid real estate foreclosures.