Frequently Asked
Questions - Foreclosures.
How Fast Can A Foreclosure Happen?
In Ohio, an uncontested foreclosure can be
completed in 150-180 days from the time the loan becomes
delinquent. The mortgage company can record a Notice of Default (Lis
Pendens), the first step in the foreclosure process as soon as the loan
is two months delinquent. Typically, the first indication a homeowner
gets that a foreclosure has commenced is notification of the Notice of
Default.
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The best way to stop the
foreclosure is to bring the loan current. To do that you would need to
pay all delinquent amounts as well as the costs and fees incurred by
the mortgage company to file and process the foreclosure.
Many borrowers are not able to
bring the loan current and are forced to look at other alternatives to
avoid foreclosure. Even if you are well into the foreclosure process,
most lenders are willing to grant you additional time to remedy the
situation if they believe it is reasonably likely they can avoid
acquiring your property through foreclosure.
Among the alternatives the lender
might be receptive to:
Get the property sold so you can
save your equity.
If you don’t have
equity, cooperate in a Short Sale and accept a discounted payoff as
“full payment” on the loan.
A forbearance agreement in which
you agree to both stay current on the loan going forward and to a
schedule of repayment on delinquent amounts.
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What Options Do I Have To Avoid
Foreclosure?
There are several things you can
do to avoid foreclosure. It is usually best to let your lender know,
right away, that you intend to solve the problem so they
won’t have to get the property in foreclosure.
Here are some of your options:
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In order for your lender to
recover losses incurred on your mortgage as a result of foreclosure,
the lender would need to do a Judicial foreclosure. While,
theoretically a lender could pursue a deficiency judgment through a
Judicial Foreclosure on some mortgages, it almost never happens in
Florida.
The lender is normally left with
the proceeds generated at the Courthouse Steps Sale or from a sale
after acquiring the property at the Courthouse Sale. This is another
reason why lenders would prefer to work with the homeowner to solve the
problem and avoid getting the property through foreclosure.
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Can I Just Deed My Property
To Someone And Avoid Foreclosure?
Deeding your property to a third
party does not eliminate your obligations related to the loan. Unless
the mortgage is paid off when you deed the property, you will almost
certainly remain as the party primarily responsible for the repayment
of the loan. If the lender eventually forecloses, it will be on your
credit record.
If you deed your property to a
third party you also give up control of the property. It is nearly
always a bad idea to simply deed your property to a third party.
Do not deed your property to
someone without paying off the loan unless you have consulted with an
attorney.
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By almost any measure a completed
foreclosure is the most damaging event your credit status can encounter
– worse than bankruptcy. A foreclosure on your credit record
will negatively impact your ability to borrow money for years.
For most people, it is well worth
the time and effort to solve the problem before the foreclosure is
done.
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If a Notice of Default has been
recorded against your property it means your lender has started the
formal foreclosure process. In Florida, a borrower must be two months
delinquent before a lender can commence a foreclosure action by
recording a Notice of Default.
A borrower has over three months
from the recording of the Notice of Default to work something out with
their lender and avoid the completion of the foreclosure.
Once the Notice of Default has
been recorded, it is important to act to avoid losing the property and
having a foreclosure on your record.
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Yes, you can and you should look
at a Forbearance Agreement as an option to avoid foreclosure.
FORBEARANCE AGREEMENT –
An agreement between a mortgage company and a borrower in which the
borrower promises to stay current on the mortgage going forward and
agrees to a repayment plan for delinquent payments and costs and fees
associated with the foreclosure action. A Forbearance Agreement is a
tool that allows the borrower to keep the property.
The lender will expect you to show
that the delinquency was due to circumstances out of your control
(injury, illness, job loss) and that the financial difficulties have
been corrected.
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I Have Heard Of Foreclosure
Scams, What Should I Look For?
Unfortunately there are quite a
few people that might try and take advantage of your temporary
misfortune. These people will try and convince you that they can
provide a quick and easy solution to your mortgage problem. As a
general rule, if it seems too good to be true, it usually is.
Here are a few examples of the
scams you could encounter:
You need to sell your property
fast or you will be ruined.
If you have equity, these guys
want it by providing fast cash, they solve your problem and they get
your equity. On occasion they offer a small amount of money to you
– which is normally a signal they are getting lots of your
equity.
Sign the deed to the property to
us and we will take care of everything.
Sometimes called the
“Bailout” scam, the investor tells the homeowner
that he will be allowed to stay in the home and pay
“rent” to the investor until a long term solution
can be worked out. Once the owner signs the deed to the property over
to the investor, big trouble usually follows. If the investor has the
deed, the investor has control.
Here is the big kicker –
the homeowner who signed over the deed is still responsible for the
loan. The investor nearly never makes the mortgage payments and the
homeowner gets hit with the foreclosure.
For a consulting fee, I will work
with your lender to find a solution.
Your lender will work with you
directly if you want to make arrangements to make up past payments and
keep your property. This would normally involve a Forbearance
Agreement.
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While the Short Sale itself does
not stop the foreclosure, lenders normally work with a homeowner and
delay the foreclosure if necessary, if they receive a legitimate Short
Sale proposal. The key here is to submit a complete, well organized,
Short Sale proposal.
The lender does not want your
property, and would rather resolve the situation before the foreclosure
is complete.
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Absolutely, In fact, your lender
would rather you sell the property than allow the foreclosure to
continue.
Your lender does not want to take
your property through foreclosure. Even if you have no equity in the
property, the lender wants to find a solution.
This is precisely why lenders
agree to a Short Sale and accept a discounted payoff to fully satisfy
the loan. In a Short Sale, the lender in nearly all cases pays all the
closing costs – including title fees, escrow fees and the
real estate commission.
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Should I speak with my lender
when they call?
It is best that you not avoid
calls or letters from your mortgage company, particularly if a
foreclosure is pending. Your mortgage company does not want to take
your property through foreclosure. The mortgage company would rather
look for options to avoid foreclosure.
When speaking with your mortgage
company, be honest about your circumstances and listen for them to
possibly suggest options. The mortgage company knows the best way for
them to limit losses on a delinquent mortgage is to work with the
homeowner.
Be sure to keep notes of all
conversations you have with the mortgage company including dates and
times of calls, the name of the representative with whom you spoke and
the details of the conversation.
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