My Real Estate Tips

It can be difficult to find legitimate help for foreclosure issues because of the many scams that abound these days.  It’s shameful that there are still people who try to take advantage of those who find themselves in this situation.  

Here is a list of programs that are either operated by the U.S. government or have the U.S. government’s seal of approval:

• To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm

• Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.  The HOPE NOW website: www.hopenow.com

• Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp

• Go to this Web site for information on federal mortgage modification and refinancing programs: www.makinghomeaffordable.gov

• The Controller of the Currency’s consumer information site for banking-related questions is www.helpwithmybank.gov

• OCC Customer Assistance Group and consumer assistance site: www.occ.gov/customer.htm

• Federal Trade Commission: www.ftc.gov/bcp/edu/pubs/consumer/homes/rea04.shtm

• Federal Reserve Board: www.federalreserve.gov/pubs/foreclosurescamtips/default.htm

If you’re facing foreclosure, please take some time to check out the help that is available through these resources.

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Fannie Mae has announced a new program to help homeowners who originated their home loan under the Fannie Mae or Freddie Mac conventional loan programs.  If you don’t know if your loan is this type loan call your lender and ask.  If your loan qualifies and you are in trouble trying to make payment or your home is in the process of being foreclosed on, YOU CAN GET HELP NOW.  Please read the information below provided from the Fannie Mae web site.

The Federal Housing Finance Agency, the regulator of Fannie Mae and Freddie Mac, recently announced a new Streamlined Modification Program that is designed to help struggling borrowers avoid foreclosure by having Fannie Mae work with mortgage servicers to modify loans into more affordable terms.

You may qualify if all of the following are true:

• Your mortgage loan is owned by Fannie Mae or Freddie Mac.
• Your mortgage loan is 90 or more days past due.
• You occupy the property as your primary residence.
• You are not in bankruptcy.

To achieve a more affordable mortgage payment, your loan servicer may:

• extend the term of your loan to as much as 40 years
• reduce your mortgage interest rate for a period of time
• defer payment of part of your principal, or
• offer a combination of all three.

What You Can Do Today
If you are about to fall behind, or have fallen behind on your mortgage payments, or if your loan has been referred to an attorney, the most important step you can take is to get help early from your mortgage lender, servicer, or housing counselor.

Here are important steps to take immediately:

• Call your lender or loan servicer to talk about your situation. You can find the contact information on your monthly mortgage statement or coupon book.
• If you can’t reach your lender or servicer or you do not receive help, contact the Homeownership Preservation Foundation at 1-888-995-HOPE. Experienced counselors can help you develop the best plan for your personal financial situation. This counseling is free.
• Gather the information you will need. You will be asked to provide:
  • letters or communications from your lender,
  • foreclosure notices,
  • recent mortgage statements showing your loan number,
  • homeowner’s insurance policy,
  • last two pay stubs and most recent tax return for all borrowers named on the mortgage,
  • proof of other income, such as child support, alimony, Social Security, or pension,
  • bank account statements, and
  • list of major monthly bills, including child care, utilities, credit cards, and cell phone.
• Understand your options. Depending on your situation, you may have several options to discuss with your servicer or counselor. They could include:
  • Repayment Plan — You may be able to catch up on missed payments by creating a schedule for repaying the past-due amount.
  • Advance — If your mortgage is owned by Fannie Mae (your servicer has this information), and your missed payments are due to a temporary financial hardship, you may be eligible for an unsecured personal loan, such as Home Saver Advance™, that is available from your servicer to help you get current with your payments.
  • Modification — In some cases, mortgage loan terms can be changed on a temporary or permanent basis to make the payment more affordable.
• Avoid foreclosure rescue scams. Don’t become a victim. Foreclosure scams seek to take advantage of your situation.
• Your financial situation may have changed significantly since you qualified for your home due to unemployment, divorce, job change/relocation, or medical issues. You may want or need to sell your home as a result of this change. There are options for borrowers who are worried about possible foreclosure:
  • Pre-foreclosure or Short-Sale — Servicers work with borrowers to sell their home and use the proceeds to pay off the loan even if the proceeds are not enough to settle the entire balance.
  • Deed-in-lieu — Borrowers sign over title to the property to Fannie Mae without the expense of foreclosure.

You have more options if you act quickly.  Now is the time to ask for help!

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There are troubled waters ahead for property owners, and there are sharks in those waters.  In times like these there is always someone around ready to take advantage of the situation, and of you.  More homeowners today than ever before are experiencing mortgage payment hardships.  Many are unable to make payments because of an income loss due to the economic down turn, or because they have an adjustable rate mortgage and the rate has increased and they can’t make the much higher payment.  Plus, in many markets real estate values are falling and owners are finding that they owe more than their home will appraise for, and are unable to sell it.  Car dealers call this being ”upside down.”

In this kind of environment it’s easy to fall victim to the many money-making scams that abound today.  One of these schemes is to approach homeowners that have fallen behind on their payments through ads or research and offer programs to help the homeowner avoid foreclosure.  The persons involved will meet with the homeowner and offer to deal with the lender for the homeowner.  The homeowner is then asked to sign quite a bit of paperwork, including signing over the deed to the property.  They offer to take over the property even though you may owe more than it’s worth, and they ask the home owner to sign over the deed so that they can deal with the mortgage company and the homeowner can stop worrying about it.  Some even imply that the owner’s obligation ends when they sign the deed over to them.

In many states, and Texas is one of  them, you can deed your property to someone even though it has a loan (mortgage) on it, without obligating the buyer or person you sign it over to, to pay the mortgage.  This means you are still obligated to pay the debt or loan on the property.

Most, if not all, mortgage loans today have a “due on sale clause” in the mortgage agreement, and when you sign over the title to someone else it activates that clause.  The balance owed on the loan is now due in full.  So, if you weren’t in foreclosure before, you probably will be now.  You’ve signed over your property to someone and move out, thinking that you can get on with your life.  The new “owner” rents out your home and starts collecting income.  He may or may not (most likely will not) talk with your mortgage company.  Some do, they make promises of payments to stall off foreclosure and collect more rent.

Most mortgage companies take about six months before finalizing foreclosure, and in today’s world this time frame has been stretched out to a year or more.  When the loan is foreclosed on, some of these guys just disappear, after taking 6 months or more rent, sometimes thousands of dollars, from the unsuspecting tenants.  The tenants often get a rude surprise by receiving an eviction notice from the new owners, your mortgage company. 

There are others who work this scheme that may, with your deed in hand, negotiate and offer to pay off your loan at a price far below your loan balance, which your lender may accept.  Now when that happens, more often then not you are still on the hook for the difference between what the new owner paid your mortgage company and your loan balance, plus any late charges and attorney’s fees that have accrued.  Even worse, you may owe the IRS taxes on that difference as income. 

So be very careful when dealing with anyone who offers to take over your problems, you may be creating a real nightmare.  It is far better when trying to avoid foreclosure to try and renegotiate your loan yourself or use your own attorney.  There are refinance programs available, with more coming, that will refinance your loan even if your credit has gone bad.  I’ll try and cover those plans that are available and will be available as soon as the dust clears in Washington.  

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A short sale is a real estate property being sold where “Seller’s net proceeds at closing will be insufficient to pay the balance of seller’s mortgage loan.”   In other words, you owe more money on the property than you can sell it for, which is a position many Americans are finding themselves in lately.  There are some things you can do to protect yourself, if you are one of the people in this position. 

Be sure you let your mortgage company know you are putting your home on the market and that you will probably have to sell it for less than you owe.  Since it’s happening a lot these days, your mortgage company may already have their own procedures set up for such a circumstance.  They may even have a “short sale” package they can provide you with as a guide.

If you are having a realtor handle the sale, be sure before listing the property for sale with him, that he understands all the circumstances, including that the lender will have to be in agreement with the sale before it can be completed.  Be sure he relays a complete disclosure of all that information to the buyer.

There are several things you should consider putting in your contract to sell.  They are that you the seller require:

1.  The consent of the lien holder to sell the property in accordance with the terms of the contract.
2. The lien holder will accept seller’s net proceeds in full satisfaction of your (seller) liability under the mortgage and provide you (seller) with an executed Release Of Lien against the property.
3. You may want to include the following to be fair to the buyer — The contract will be terminated and the buyer’s earnest money will be returned if the lien holder refuses or withdraws it’s consent and agreement prior to funding and closing.

    

 Your lender may not be willing to take the full loss of the difference in your loan balance and your net proceeds, however it’s a good idea to have it that way in your contract.  If the lender refuses, you can decide what to do next as an option – for instance, you may negotiate to take half the loss as a promissory note and get them to take the other half as a write off.  In any case, try to leave things open enough so that you can negotiate the best deal possible.  Your Realtor, Attorney and/or CPA can help you with that.  (For some solid tips on selling quickly Click Here!)  

This article is intended to make you aware of certain options that may be available to you when you try and deal with sliding real estate values in turbulent economic conditions.  These are important issues for you to consider and the information above is not intended as legal advice.  I recommend you consult with an attorney and other professionals such as your CPA and Real Estate Professional about these and other issues regarding this type of transaction.

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