Avoiding Foreclosure

Are you behind in your mortgage payments?
Have you received a preforeclosure (warning) letter from your lender?

You shouldn't be ashamed. Many homeowners in our area are finding themselves in this situation – many times through no fault of their own. We know that in today's economy there are many reasons this could be happening to you & your family; a job loss, a serious illness or other circumstances can put you in danger of foreclosure.

The economic downturn has led to many homeowners being "under water" in their loans, meaning they owe more than their home is worth, making it impossible to refinance.

If you've become one of these homeowners, don't panic. Foreclosure, and its accompanying effect on your credit, is not inevitable. There are many options out there, and your circumstances may make one of those options feasible and desirable for you.

To keep your optiosns alive, DON'T IGNORE your lender, you need to communicate with them. They should be seen as a friend, not foe at this time.

This would also be a good time to consult with a tax advisor and a Keefe Real Estate agent. Keefe has a number of agents that are specifically trained to work with these situations, and will be able to help you explore foreclosure options.

Contact Keefe Real Estate to work with a knowledgeable area expert.

If you're not aware, many lenders would rather not foreclose. They stand to take a huge loss on a foreclosed home. So in many cases, they'll consider alternatives, of course they will have the final approval of these options. Some of these alternatives could keep you in your home.

Loan Modification & Short Sales

While only some homeowners will be able to take advantage of this alternative, it may be your best option because it keeps you in your home and typically results in the least damage to your credit

Your lender may be willing to modify the terms of the loan, whether it's reducing the principal, lowering the interest rate or other creative strategies to make the loan affordable for you. As part of the stimulus package, the U.S. government has programs to provide incentives for banks that use this strategy as an alternative to foreclosure. These programs are HAMP (Home Affordable Modification Program) and HAFA (Home Affordable Foreclosure Alternatives) program for short sales and deeds in lieu of foreclosure. To see if your lender is participating, visit www.MakingHomeAffordable.gov.

Short Sales are becoming one of the fastest-growing foreclosure alternative. Many lenders will allow a Short Sale, when the home sells for less than the amount of the loan. This is attractive for lenders because they lose less money than in a foreclosure. Also, Short Sales generally take less time than foreclosures, so the banks don't have to carry the properties on their books as liabilities.

It's attractive for homeowners because the impact on their credit is far less than in a foreclosure. You may be able to buy another home in as little as two to three years after a Short Sale, compared with a typical seven-year wait after a foreclosure.

Short Sales are paperwork-intensive, and there are many details involved. If you're considering this option, it's critical to work with a trained real estate agent who knows all the steps required to successfully complete a Short Sale.

Contact Keefe Real Estate to work with a knowledgeable area expert.

Keep in mind that no matter which option you choose, there may be tax and other financial consequences. You should consult with a tax advisor or legal expert.

Tips from HUD

The U.S. Department of Housing and Urban Development has 10 tips for avoiding foreclosure:

Don't ignore the problem.
Contact your lender as soon as you realize you have a problem.
Open and respond to all mail from your lender.
Know your mortgage rights.
Understand foreclosure prevention options.
Contact a HUD-approved housing counselor.
Prioritize your spending.
Use your assets.
Avoid foreclosure prevention companies.
Don't lose your house to foreclosure recovery scam.

Here are some additional resources from HUD on avoiding foreclosure.

Contact Keefe Real Estate to work with a knowledgeable area expert.

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Foreclosure/REO Listings & Market Statistics