How Can I Get A Loan To Stop Foreclosure?

How Can I Get A Loan To Stop Foreclosure

If you’re facing foreclosure, an effective way of putting a halt to the problem is by getting loans to stop foreclosure. The reason is that foreclosures are extremely damaging to your credit score, not to mention the stress and hassle of being forced to move out of your home. However many homeowners facing foreclosure do not believe that they are eligible for the loans they need to save their homes. What can you do? It turns out your chances are better than you may think. Let’s look at the options.

Loans to Prevent Foreclosure

Traditional loans stop foreclosure effectively — if you can get them. A traditional lender like a bank or credit union will offer the best rates and look the best on your credit history when you later try to get financing for something else.

Unfortunately, traditional lenders can be extremely picky about whom they lend to. Homeowners facing foreclosure often do not have the best credit. In some cases, they may be facing foreclosure because of serious adverse life events that have cost them their jobs and income, leading them to tap out their credit to “stay afloat” — and which may be reflected in their credit scores.

In other cases homeowners are facing foreclosure because they came into things with sub-prime credit and obtained a mortgage from a sub-prime lender. Now, thanks to the housing crisis and its aftermath, sub-prime lenders have started closing their doors in Canada and calling in their loans. The borrowers who find themselves being asked to repay their mortgages often find there are no traditional lenders willing to take on borrowers with sub-prime credit.

Therefore, traditional loans are often not an option. Fortunately, they are also not the only option.

Getting a Loan to Stop Foreclosure

Learn the pros and cons of getting a new loan—either
If you’re facing a foreclosure, you might be able to refinance your loan or take out a reverse mortgage to save your home—although refinancing could be difficult and reverse mortgages are risky.

Refinancing usually isn’t possible if you’ve missed a lot of mortgage payments and have bad credit. While reverse mortgages don’t require credit qualification, taking out this kind of loan is usually a bad idea. Reverse mortgage loans are basically designed so that the lender eventually ends up with the home and have many other significant downsides as well.
Read on to learn more about refinances and reverse mortgages, why these options probably aren’t ideal ways to prevent a foreclosure, and alternatives to potentially consider.

Refinancing Your Loan to Stop a Foreclosure

With a refinance, you to take out a new loan to pay off the existing mortgage, including the delinquent amount, which will stop the foreclosure. You will need to have a stable income and, usually, equity in the home to qualify. By refinancing, you might be able to get a lower interest rate, which would reduce your monthly payment amount.

However, getting a better interest rate—or approved for a refinance at all—can be difficult if you’re facing foreclosure because you fell behind in your payments. Once you skip a payment, the lender will start reporting the delinquency to the three major credit reporting agencies: Equifax, Transition, and Experian. Your credit score will then fall. The more payments you’ve missed, the worse your score will be. People with bad credit generally can’t qualify for a mortgage refinance, let alone one with better terms than they already have. (To learn more about what happens after you stop making payments, see The Order of Events When You Stop Making Mortgage Payments.)

What’s a Foreclosure Bailout Loan?

A “foreclosure bailout loan” is a refinance loan that’s marketed to struggling homeowners to bring a home out of foreclosure. The homeowner takes out a new mortgage to pay off the loan that’s in default. You don’t have to have good credit, but these loans usually require you to have considerable equity in the property, and you’ll have to pay a very high interest rate. In almost all cases, you should avoid foreclosure bailout loans. People who can’t make their regular mortgage payments also tend to default on foreclosure bailout loans; you’ll probably find yourself back in foreclosure after getting this type of mortgage.

Also, you should be aware that some bailout lenders are scammers who are just trying to cheat you out of your money—or title to your home—and leave you in worse shape than you were in before.

Using a Reverse Mortgage to Stop a Foreclosure

If you can’t qualify for a refinance, another option—though not necessarily a good one—to stop a foreclosure is to take out a reverse mortgage to pay off the existing loan. The most widely available reverse mortgage is the FHA Home Equity Conversion Mortgage (HECM).

With a reverse mortgage, people who are 62 and older can get a loan based on their home equity. A reverse mortgage differs from a traditional mortgage in that the borrower doesn’t have to make monthly payments to the lender to repay the debt. Instead, loan proceeds are paid out to the borrower in a lump sum (subject to some limits), as a monthly payment, or as a line of credit. You can also get a combination of monthly installments and a line of credit. The loan amount gets bigger every time the lender sends a payment, until the maximum loan amount has been reached.

If you’re facing a foreclosure and you get a reverse mortgage, the reverse mortgage stops the foreclosure by paying off the existing loan. But reverse mortgages themselves are often foreclosed, and come with many disadvantages, like potentially losing your eligibility for Medicaid and high fees.

Alternative lenders are available who will take you on even if you have bad or no credit. As a rule, the main criteria are that you have at least 10% equity in your home and a steady source of income. Provided you have these things, alternative lenders can quickly write you a loan to stop foreclosure immediately.

Compared with traditional loans, alternative mortgages generally do not last as long. The idea is to use them as a “bridge” which allows you to stay in your home — and avoid seriously damaging your credit with a foreclosure — until you can get “back on your feet” financially. Since you retain up to 90% of the equity in your home, you can also refinance many of your other debts (such as property taxes) and help improve your credit score while you work back towards a traditional mortgage.

At HOS Financial, our Refinance Buy Back program will connect you with alternative lenders who will refinance your home even if you have bad credit. At the same time, we will also provide you with the credit mentoring you need to restore your credit record to good standing.
The result is that by the time you exit the program (usually in 2-3 years) you will have the kind of credit that allows you to walk into a bank and walk out with a regular mortgage. To make things even better, a part of the rent you pay while in the Refinance Buy Back program will be set aside to use as a down payment on your new mortgage.

Other Options to Consider

If you’re having trouble making your mortgage payments, consider looking into other foreclosure prevention options. A few different options to consider include getting a loan modification, reinstating the loan, working out a repayment plan, or giving up the property in a short sale or deed in lieu of foreclosure. You might also consider selling the home and moving to more affordable accommodations.

What Mortgage Foreclosure Solutions Are Available To Stop Foreclosure?

If you’re facing the prospect of losing your home, there are a number of mortgage foreclosure solutions available. Depending on your finances, these range from ways to keep your home (in many cases without needing to go to court) all the way to ways you can make a “clean exit” with minimum stress and damage to your credit report. Let’s look at what choices you have available to you.

The Price Of Doing Nothing

For many homeowners facing foreclosure, simply doing nothing is a very tempting option. Just the word foreclosure can be terrifying. As a result people often lose their homes, suffer terrible damage to their credit report (which may cost them the ability to get a loan on a car or even the ability to get a job), and may even find themselves staring down a sheriff armed with an eviction notice.

To make matters worse, if the home does not sell at a high enough price to satisfy the outstanding mortgage balance and court costs and legal fees and other expenses… you may find these bills hanging over your head long into the future.

The fact is that no matter how fearful the prospect of dealing with a foreclosure may be, doing something is always better than doing nothing. Even if you cannot afford to keep your home, simply talking to the lender and working out a “friendly foreclosure” will leave you far better off down the line.

If you can afford to keep your home in the long term but you are simply the victim of unfortunate circumstance, then this is an even better option.

Negotiating With the Lender

If your finances are in reasonably good shape but you happened to fall behind on your payments due to an emergency, there’s a very good chance your lender will be willing to negotiate. This is especially true if they have not actually brought the courts into play just yet. They may be willing to work out an alternative payment plan with you — this will allow you to stay in your home, and generally represents the best of all possible options.

Formal foreclosures are expensive and slow from the lender’s perspective. Therefore, if you can show them that you will be able to keep up with your payments in the future, the lender may be quite willing to work out a new schedule of payments that will bring you current again — and which will let you avoid foreclosure entirely.

Friendly Foreclosure or Short Sale?

Just as the name suggests, a “friendly foreclosure” does not involve an adversarial process where the lender tries to rip your home out from under you using the court system. Rather, in a friendly foreclosure you go to the lender and agree to hand over title and vacate the property in exchange for them calling it a “done deal.”

With a friendly foreclosure, you generally cannot be held liable for any excess expenses. While a friendly foreclosure will show up on your credit report, it isn’t nearly as damaging as a “formal” foreclosure.
Short sales are similar to a friendly foreclosure but usually you the homeowner are responsible for having the home sold. The proceeds of the sale go to the lender, who agrees that even if the home sells below market value they will consider the mortgage case closed. As with a friendly foreclosure, a short sale still hurts your credit — but, again, not as badly as the alternative.

Refinance to Keep Your Home

If you would prefer to stay in your home, or if your lender is not being cooperative, you can still save yourself from a court foreclosure. This works by simply paying the balance of the mortgage by refinancing.
In the event your credit is in good shape, you may be able to refinance with a traditional lender. If this is an option for you, it’s likely your best one. Unfortunately as a homeowner facing foreclosure you may not represent an attractive “credit risk” to traditional banks.

That’s why HOS Financial has a Refinance Buy Back program which does an “end run” around the traditional banking system by connecting you with private lenders. These lenders are willing to pay off your mortgage no matter what your credit score happens to be.

In fact, the HOS Financial program can stop foreclosures even if they’ve already begun to move through the court system. As long as your case is still inside the “Redemption Period,” HOS will pay the amount the judge has set — and put an end to the case.

After HOS Financials private lender takes over the mortgage, you keep living in your home. You don’t have to worry about any judgments on your record. Instead, a portion of your monthly rent is put aside to go towards a future down payment — so you will be able to smoothly transition back to a traditional mortgage in just a few years.

The Refinance Buy Back program does not stop there, either. While you’re in the program, you will work with HOS Financials expert credit counselors to bring your credit report back to good shape. As a result, by the time you are ready to go back to a regular mortgage, normal banks will be happy to see you walk through their doors.

If this sounds right for you, contact us immediately. Foreclosures mean that the clock is ticking, and you need to take action now or face losing your home forever.

Foreclosure Lawyer Free Consultation

When you need to stop a foreclosure, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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What Happens After The Foreclosure Sale Date?

What Happens After The Foreclosure Sale Date

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan.

Formally, a mortgage lender (mortgagee), or other lien holder, obtains a termination of a mortgage borrower (mortgagor)’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).

Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowner association dues or assessments.

What Happens After the Foreclosure Sale Date?

As a homeowner, the last thing you want to think about is losing your home. But as many people have found, it’s common to struggle with those hefty mortgage payments, especially if you lose your job or the housing market crashes. Even if you have fallen behind on your payments, you may be able to get back on track and save your home. However, if you’ve exhausted your options and face foreclosure, it’s important to know what happens after the foreclosure sale date.

Can You Get Your House Back After Foreclosure?

No. Not in Utah. Some other states allow for this under a process called “statutory redemption.” Under this rule, you have a limited amount of time to pay the foreclosure sale price (plus interest in many cases), and you are usually allowed stay in your home during the redemption period, whether it’s 30 days or two years.

Some states permit a foreclosed homeowner to buy back the home within a certain period of time after the sale. This is called a redemption period. To redeem the home, you usually have to pay the total purchase price, plus interest, and any allowable costs, to the purchaser who bought it at the foreclosure sale. In some states, though, you’ll have to pay the total amount owed on the mortgage loan, plus interest and expenses.

The deadline and procedures for exercising a right of redemption varies from state to state, and not all states provide a redemption period after the sale.

In order to redeem, the former homeowner has to come up with another source of financing. But getting a bank to lend you money after a foreclosure can be very difficult, even if you have a steady income, because your credit score will have taken a bit hit.

Some special programs are available to help homeowners in this type of situation. For example, a program called Stabilizing Urban Neighborhoods (SUN) offered by a nonprofit organization helps foreclosed homeowners in Massachusetts, Maryland, Rhode Island, New Jersey, Illinois, Connecticut, and Pennsylvania by purchasing foreclosed properties and then reselling those properties back to the former homeowners, usually at current fair market value, with a new, fixed-rate 30-year mortgage.

If your state provides a redemption period after the sale, you sometimes have the right to live in the home payment-free during this time. For example, in Michigan, most homeowners get a six-month redemption period (some people get a year) during which time they can live in the home. (Under some circumstances, though, like if the foreclosed homeowner unreasonably refuses to allow the purchaser to inspect the home, the purchaser can begin an eviction sooner.

By staying in the home during the redemption period, you can save money by living rent-free. This way you can use the money that you otherwise would have spent on housing to pay other bills and start rebuilding your credit.

In some cases, you might be able to remain in the home as a tenant after the foreclosure sale. For example, Freddie Mac offers a program that allows recently foreclosed homeowners to rent their home on a month-to-month basis, if Freddie Mac acquires the property as a result of foreclosure. (You can learn more about this program, called the Freddie Mac REO Rental Initiative, at the Freddie Mac website. If you want to find out if Freddie Mac owns your loan, go to www.freddiemac.com/mymortgage or call 800-Freddie.)

Live in the Home until You’re Evicted

If you don’t move out after the purchaser gets title to the home (typically either after the sale or after the redemption period), the new owner (often the foreclosing party) will start eviction proceedings to remove you from the property. The length and procedures for the eviction process varies from state to state. In some cases, the foreclosing party can include the eviction as part of the foreclosure action—depending on your state’s law and the circumstances of your case—while in other instances, it will have to file a separate eviction action with the court.
You might receive a notice prior to the start of the eviction (called a Notice to Quit), which gives you a certain amount of time—for example, three days—to leave the home before the eviction officially starts. While you can stay in the home until you’re forcibly removed through the eviction process, it is generally best to leave the property before this time period expires. (You can learn more about eviction after foreclosure in Foreclosure Timeline: Getting Notice to Leave.)

Getting a Cash for Keys Deal

To avoid having to complete an eviction, the purchaser might offer you a “cash for keys” deal. With this arrangement, you agree to leave the home by a certain date, and in good condition. In exchange, the purchaser gives you a specified amount of cash to help pay for your relocation costs.

Moving Out Voluntarily After the Foreclosure Sale Date

If you’ve stopped paying your mortgage, you’re allowed to remain in your home until the foreclosure process is completed. Once you reach the foreclosure sale date you go from being a homeowner to a tenant, as title legally passes from you to the new owner. Some owners may agree to rent the home to you, but most will want to take possession as soon as possible. Each state has its own laws and regulations governing this process, including the amount of time an owner must give you to vacate the property.
At this point, you can move out voluntarily, attempt to redeem the property through statutory redemption, or wait until the sheriff shows up to execute an eviction. Because the eviction process takes time and money, some owners will actually pay you to move out voluntarily, a practice called “cash for keys.” This arrangement spares you the hassle of an eviction and provides you with some extra funds to help with your relocation.

Eviction after Foreclosure

So what happens after the foreclosure sale date if you’ve decided against moving out voluntarily? In that case, the new owner will try to force you out. However, this must be done formally through the court using the eviction, or “unlawful detainer”, process. Once you’ve received a notice of eviction, you can still move out voluntarily. Otherwise, you will be escorted off of the property in a matter of days by local law enforcement.
It’s also important to know that an eviction can further damage your credit score, making it difficult to obtain a loan or convince a landlord to rent to you. Many housing applications and even some job applications will ask if you’ve ever been evicted, and landlords and employers can verify this information by examining evictions in public records.

Rebuilding Your Finances after the Foreclosure Sale Date

Whether you move out voluntarily or are evicted, a foreclosure does significant damage to your credit score. This makes banks very hesitant to lend you money, and makes landlords question whether you’ll pay rent consistently. As a result, you should start saving as much money as possible during the foreclosure process in case you need to pay a higher deposit to ease the concerns of your future landlord. Additionally, you’ll need to focus on rebuilding your credit by paying bills on time and getting control of your debt. After seven years, the foreclosure should disappear from your credit report, making life a little easier.

What Happens if My Landlord Goes into Foreclosure?

It’s also possible to be seriously affected by a foreclosure even if you don’t own a home. This is the case for renters whose landlords fail to pay their bills. Without even knowing that a foreclosure is taking place, you could receive a notice to vacate the property – even if you have many months left on your lease. Fortunately, you should be given at least 90 days’ notice, and you may be able to sue your landlord to help cover the costs of relocating.

Be Prepared for What Happens After the Foreclosure Sale Date. Since a foreclosure has significant ramifications on your housing, finances, and credit, it’s important to consult an attorney as early on in the process as possible. Whether you’re trying to avoid foreclosure, or you’re in the final stages of one, you’ll need to know what your options are and what to expect after the foreclosure sale date. Be prepared and make well-informed decisions by contacting a local lawyer who has experience with foreclosures and foreclosure alternatives.
Options left after the Foreclosure Sale Date

Loan Modification

Modifying your loan is another option you have to stop a foreclosure. Your attorney can negotiate on your behalf with the bank to modify your loan and thus help you save your home. In most cases, your loan modification is likely to be accepted if you show that you are willing and able to pay back the money you owe.

If you had difficulties paying your mortgage due to a valid hardship — factors outside your control such as loss of employment, a chronic sickness that drained your finances, change in market interest rates and so on, your loan is likely to be modified. However, keep in mind that it is up to the bank to accept or reject your loan modification request. A good foreclosure defense lawyer will have a loss mitigation team to present your situation to the bank in such a way to get your loan modification approved.

Deed-in-Lieu of Foreclosure

Sometimes, a deed-in-lieu of foreclosure can be a better option than doing a short sale or modifying your loan. In a deed-in-lieu, you convey all the interests in your home to the bank to satisfy the mortgage debt and thus avoid the home being foreclosed.

When a deed in lieu is completed, you will be completely released from the debt associated with the mortgage. A deed in lieu will save you from the long foreclosure process, which usually increases the amount of deficiency due to attorney fees incurred by the lender to initiate and execute the foreclosure. Moreover, your credit will not suffer as much as it would should a foreclosure take place.

Filing for Bankruptcy

Filing for Chapter 7 or Chapter 13 bankruptcy can help to delay the foreclosure sale date. During this period, the attorney can work out a deal with the bank’s attorney to modify your loan repayment terms.
In most cases, foreclosures are initiated after you have repeatedly failed to service your monthly payments. If financial hardship is the reason for you failing to pay the mortgage, you are likely to be given new terms of payment. However, this decision is not automatic and will depend with the bank.

Short Sale

When the date of sale has been delayed, you can opt for a short sale rather than wait for your home to be auctioned. Remember, the bank is only interested in recouping back their money and if your home is auctioned, it may go for a price that is much lower than its market value. Moreover, if the money the home fetches is not enough to cover your debt, you will be responsible for paying the remaining amount known as a Deficiency Judgment. A Deficiency Judgment must be filed by the bank within four years of the foreclosure sale date.

A short sale can help you get a fair price for your home, pay off your remaining mortgage balance and remain with a good amount of cash to help you move on. This is a better route than waiting for the home to be auctioned.

The most important thing to do when you receive a foreclosure sale date notice is to contact and cooperate with an experienced foreclosure attorney in your area to help you determine your next step. Call Ascent Law LLC today for your free consultation.

Foreclosure Attorney Free Consultation

When you need legal help with a foreclosure in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
itemprop=”addressLocality”>West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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Is a Foreclosure Better or a Short Sale?

As Utah Real Estate Lawyer, we get a lot of calls from clients who tell us that their real estate agent has recommended a short sale as an alternative to foreclosure.  The selling point is that you will avoid a foreclosure on your credit report.  Homeowners think this is a great option, but, while it sounds great, the reality isn’t as wonderful.  A short sale can lead to a number of pitfalls, short sales are not necessarily better than the dreaded foreclosure. Some common short sale traps are outlined below.

Is a Foreclosure Better or a Short Sale

Short Sales Cost Time and Money

(1) You don’t receive any money from a short sale, yet you have to keep your home in sale ready condition: in a short sale, your lenders are agreeing to take less than what is owed.  This means that there is no equity in the home for you.  When the sale is closed, you will receive no income whatsoever.  Your real estate agent, in an effort to get the house sold, will probably ask you to spend some time and money throwing a fresh coat of paint on the walls, repair some items that are damaged, in one instance, a client of mine was asked to install a new furnace before the sale.   These are all costs that you will not recover from the sale of the home.

You Might Still Owe the Bank After a Short Sale!

(2) You may still be obligated on the debt: when the lender agrees to a short sale, the lender is only agreeing to ‘release’ their lien on the property for less than what they are owed.  It is very likely that the lender will ask you, the seller, to sign an unsecured note for the difference owed between what was received in the short sale v. what the value of the original promissory note was.  This can leave you without a home and owing thousands of dollars to the mortgage lenders!  This is particularly egregious because in many states, the first mortgage is considered to be a non-recourse mortgage.  This means that when the home is foreclosed on, the senior mortgage lender does not have the right to come after the homeowner for any deficiency balance.  This is the case in Washington State.  Second mortgages do have a right to sue for any deficiency they may have in a foreclosure in Washington State.  However, if you do a short sale, the mortgage company can essentially contract around this ‘non-recourse’ provision and make you liable for the money they didn’t recover from the sale.  This is a terrible position to be in!

Short Sales Bring With Them Tax Liability for Debt Forgiveness

(3) You may owe taxes on the amount of forgiven debt from the short sale: although there is some recent federal law that may remove your tax obligations from a short sale, you should be cautious that the amount of the forgiven loan is not reported by your mortgage company as income to you.  This would take place in the form of a 1099 tax form and you could be liable for taxes after the home has sold at short sale.  Consult with a tax attorney in your jurisdiction to learn more about this.

Short Sales are Only Slightly Better on Your Credit than Foreclosure

(4) On your credit report, a short sale doesn’t look much better than a foreclosure.  Both are big marks against you in the credit world.  While a foreclosure looks slightly worse, with the time and effort you have to put in to keep you home in sale ready condition, the potential pitfalls of owing the balance of the mortgage anyway after the short sale, as well as the potential tax consequences, it might be worth it to simply let the home go into foreclosure and walk away.  I spend a lot of time counseling debtors away from short sales.  In the final analysis, they are the ones doing all the work and getting none of the benefit.  It is easier to simply let the home go into foreclosure, file bankruptcy to deal with the debt and start over again from scratch.  When your back is against the wall, sometimes you have to be able to see the forest through the trees. A short sale is not always what you real estate agent advertises it to be.

Free Initial Consultation with a Real Estate Lawyer

When you are faced with foreclosure, call Ascent Law for your free consultation (801) 676-5506. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

4.9 stars – based on 67 reviews


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