Regulated by the Colorado Division of Real Estate.; Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act;
How to Avoid Foreclosure
How to Avoid Foreclosure
When you miss your mortgage payments, foreclosure may occur. This is the legal means that your mortgage company can use to repossess (or take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage, your mortgage company or the U.S. Department of Housing and Urban Development (HUD) could seek a deficiency judgment. If that happens, you not only would lose your home, you also would owe your mortgage company or HUD the remaining balance on your debt. Foreclosure or a deficiency judgment could seriously affect your ability to qualify for credit in the future. So you should avoid it if at all possible!
DO NOT IGNORE THE LETTERS FROM YOUR MORTGAGE COMPANY. If you are having problems making your payments, contact your mortgage company immediately. Explain your situation. Be prepared to provide specific financial information, such as your monthly income and expenses. Without this information, your mortgage company may not be able to help. Stay in your home for now. You may not qualify for assistance if you abandon your property.
Some of your options include the following:
Your mortgage company may be able to arrange a repayment plan based on your financial situation. Your mortgage company may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently lost your job or your source of income or if you had an unexpected increase in living expenses. You must furnish information to your mortgage company to show that you would be able to meet the requirements of the new payment plan.
You may be able to modify the debt and/or extend the term of your mortgage by working with your mortgage servicer. This may help you catch up by reducing your monthly payments to a more affordable level. You may qualify for a modification if you have recovered from a financial problem but your net income is less than it was before the default (failure to pay). (Note: a modification is not a new loan, but instead a modification of the terms of your existing loan.)
Your mortgage company may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current. You may qualify if:
Your mortgage is at least four months delinquent but no more than 12 months delinquent.
Your mortgage is not in foreclosure.
You are able to begin making full mortgage payments.
When your mortgage company files a partial claim, HUD will pay your mortgage company the amount necessary to bring your mortgage current. You must execute 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 will be due if you sell or leave your property or when your mortgage matures.
Pre-Foreclosure Short Sale
This will allow you to sell your property and pay off your mortgage to avoid foreclosure and damage to your credit rating. You may qualify if:
The “as is” appraised value of your home is at least 70 percent of the amount you owe and the sale price is 95 percent of the appraised value.
Your mortgage is at least two months delinquent prior to the pre-foreclosure sale closing date.
You are able to sell your house within three to five months (depending on what your mortgage company agrees to).
An additional benefit of this option is the assistance you will receive with the seller-paid closing costs.
Deed in Lieu of Foreclosure
As a last resort, you may be able to voluntarily “give back” your property to the mortgage company. This won’t save your house, but it can help your chances of getting another mortgage in the future. You can qualify if:
You are in default and don’t qualify for any of the other options.
Your attempts at selling the house before foreclosure were unsuccessful.
You don’t have another mortgage in default.
A housing counseling agency can help you determine which, if any, of these options may meet your needs. A good resource is www.hopenow.com; their phone number is 888-995-HOPE. You should also discuss the situation with your mortgage servicer.
One last thing, beware of scams! Solutions that sound too simple or too good to be true usually are. If you’re selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially alert to the following:
In this type of scam, a “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the mortgage company to foreclose. Remember that signing over your deed to someone else doesnotrelieve you of your obligation to make your payments on your loan.
Phony Counseling Agencies
Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your mortgage company or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.
Here are several precautions that should help you avoid being “taken” by scam artists:
Don’t sign any papers you don’t fully understand.
Make sure you get all “promises” in writing.
Beware of any loan assumption where you are not formally released from liability for your mortgage debt and contracts of sale.
Check with a lawyer or your mortgage company before entering into any deal involving your home.
If you’re selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state’s Attorney General, the State Real Estate Commission, or the local District Attorney’s Consumer Fraud Unit for this type of information.
Please do not hesitate to contact your Academy Mortgage Loan Officer if you have any questions or are experiencing any difficulties with your mortgage.
This information deals with Chapter 7 consumer bankruptcy. Each state has its own bankruptcy laws, so you need to check with your state for details. Information dealing with Chapter 13 bankruptcy and consumer debt restructuring is not discussed above. The information provided is for general information purposes only and is not intended to be a legal opinion nor legal advice, nor is it intended to be a complete discussion of all the issues related to Chapter 7 consumer bankruptcy. Every individual’s factual situation is different, and you should seek independent legal advice regarding your specific situation.
Home Prices See Largest Increase Since February 2006
June 4, 2013
The housing market is showing steady gains throughout 2013, and home price increases are a welcome sign that the trend will continue throughout the remainder of the year.
According to CoreLogic's April Home Price Index, home prices, including distressed sales, jumped 12.1 percent in April on a year-over-year comparison, accounting for the largest increase in home prices since February 2006. Excluding distressed sales, home prices increased 11.9 percent in April 2013 compared to April 2012.
Mark Fleming, chief economist for CoreLogic, said that the increasing demand for new and existing homes, and low inventory in today's housing market, has created a 'virtuous cycle for price gains,' particularly in western states, which saw increases of 20 percent or more on a year-over-year comparison.
The latest CoreLogic Home Price Index also showed home prices have continued to show month-over-month improvements. According to the index, home prices increased 3.2 percent in April compared to March, marking the 14th consecutive month of month-over-month increases.
"The pace of the housing market recovery quickened in April as home prices rose across the U.S.," said Anand Nallathambi, president and CEO of CoreLogic. "For the second consecutive month, all 50 states registered year-over-year home price gains excluding sales of distressed homes. We expect this trend to continue, bolstered by tight supplies and pent up buyer demand."
Home prices up during first quarter
According to the Federal Housing Finance Agency, home prices increased during the first quarter of 2013.
The report indicated that home prices were up 1.9 percent in the first quarter when compared to the fourth quarter of last year, and were up 6.7 percent when compared to the first quarter of last year.
With the housing market showing robust gains, those after the historically low mortgage rates are finding that now is a good time to make a purchase, especially when compared to recent years.
"The housing market has stabilized in many areas and home building activity has strengthened in recent quarters," said FHFA Principal Economist Andrew Leventis. "That said, labor market weakness and still-elevated foreclosure pipelines remain hindrances to a more robust recovery."
The FHFA's Home Price Index showed home prices were up 1.3 percent in March when compared to February.
When a mortgage company makes a decision about a home loan application, the lender primarily considers three basic factors: (1) your ability to repay the loan; (2) your willingness to repay the loan; and (3) the collateral.
Ability to repay the mortgage is determined by verifying your current employment and analyzing your total income. Lenders prefer for you to have been employed at the same place for at least two years or to at least be in the same line of work for a few years. Your estimated monthly payment will be compared to your monthly income and debt.
Willingness to repay is influenced by how you have paid previous loans and by examining how the property will be used. Willingness can be gauged by your credit report and previous commitments to pay rent and/or utility bills.
Collateral is property that is pledged by a borrower to protect the interests of the lender.
It is important to remember that there are a set of rules each lender uses to assess these factors on each loan and determine if the lender will ultimately lend you money. These rules are called a Credit Policy. Each loan application is evaluated individually on a case-by-case basis. Many loan applications may come up short in one area, but make up for it with other strong points. These compensating factors may include: a large down payment, extensive educational background, or overall financial health. Securing mortgage insurance to protect a lender in the event you are unable to make your payments may also impact your qualifying for a home loan.
Contact your Academy Mortgage Loan Officer with any questions about qualifying for a home loan.