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Bob Schwartz
San Diego
real estate broker
Certified
Residential Specialist
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Home Foreclosure Options
Bank foreclosure is a distressing thing. You will not only lose your home
but a lot more. Your credit record will be shattered and you will find it
very difficult to borrow any loans to help you out in the future. However
sometimes this is your only alternative. When you receive the letter of
repossession you will need to act fast and make a decision. Firstly remember
that you do have some options but these will depend on your financial
situation. If your problems are only temporary then do think about these
options before having to face repossession and all that comes with it.
However if you see no improvements in your financial situation then
repossession may be your only alternative.
Most lending institutions are willing to work with their customers and will
provide some basic foreclosure information to them in order to come to an
agreeable solution that does not include repossession proceedings on their
homes. The property owner needs to ask their lenders exactly how they do
their foreclosures if no other solution is available. There may be instances
where a lender is willing to accept a lower payment for a brief period of
time to keep the loan from getting any deeper into default.
Bank foreclosure means that you have defaulted in your monthly payments and
the bank has given you a notice that unless you can acquire the money owed
they will take your home. This is quite a shocking thing to have to face.
However do not panic but understand what your options are. As soon as
possible go and talk to your lender and be honest and up front about your
financial position. They will be happy to work with you, as they do not want
to be stuck with a repossessed house.
What are your choices, when faced with bank repossession of your home?
Surprisingly there are quite a few. Firstly you can do what is known as a
pre foreclosure loan. This is when you find an investor to pay off your
present loan and take over the title of your home. This can be a family
member or an agent interested in selling your home for monetary gain. If it
is an agent they will sometimes pay you a little more and you will make a
minor profit. In this way you will both win. You will save your home from
being repossessed and the agent has made a nice profit. Of course the agent
will come out better monetary wise. The lender is happy because he got back
his money and will not be stuck with a repossessed house to auction.
Other foreclosure options include using a reverse mortgage. People over the
age of 62, who are looking at a repossession of their property, may have the
option of securing a reversed mortgage to pay off the debt. Basically what a
reversed mortgage does is take the current equity in the home or property
and turn it into usable cash without having to secure another debilitating
loan.
Some lenders offer the property owners a redemption period. This is a period
of time after the bank has repossessed the house and the homeowner has to
find a way to pay the debt in full, whether by refinancing or sale. Usually
eviction proceedings follow after the redemption period is offered. The best
thing anyone can do when faced with foreclosure is to remain in contact with
their lenders, so that they can investigate what legal options they have in
saving their homes. This will enable them to work out an agreeable solution
between themselves and the bank. If you don’t ask for the information on
your foreclosure, the help won’t come to you. Remember, saving your home may
be as simple as making a phone call.
It’s also very helpful during a foreclosure to document everything. No
matter what else happens, make sure you document every conversation with
your mortgage company that you have. Repossession procedures usually take
three to six months to run their course from start to finish. As long as you
stay in contact with your lender and are either; making an effort to work
out an agreeable arrangement to bring your mortgage to date, to pay lesser
amounts as agreed. Or attempting to sell your home, you have a legal leg to
stand on if for some reason you need to fight the lender in court.
Always remember that the bank does not want to foreclose on your property
any more than you do. This is because they stand to lose money. When your
house goes up for auction, the lender will be lucky if they can get their
investment back, as houses go very cheap. Everyone loves a bargain, even if
it is at someone else’s expense. Take advantage of this situation and after
you miss a couple of payments talk to your lender about lowering the monthly
payment. They may very likely work with you so they can protect their
investment.
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