Foreclosure Options - What Are Your Choices?

Custom Search

Are you facing foreclosure? Do you want to know your foreclosure options? After all, your home is suppose to be your castle! What do you want and more important, what can you afford?

Let’s start at the bad end of this situation and one of our first foreclosure options. Say you are about to lose the house due to the poor economic times, job loss, etc. The banks are foreclosing on property at a horrific rate and the exact numbers depend upon where you get your information. Every source is different.

A number of Americans receiving foreclosure notices was down 9.7 percent in January 2010 from December 2009. But, they were 15 percent higher than that of January 2009.

In all, 315,716 houses in America generated a foreclosure notice last month. That means, one in every 409 homes are being foreclosed.

NOTE: Foreclosure notices are defined as a default notice, bank repossession or auction sale notice. These figures do not include bank held shadow properties.

The number of houses foreclosed on, but not reported or listed, makes the bank not look as bad to their investors. The total number of foreclosed properties in the US is not known OR not specified. This is to keep consumer confidence up.

Tennessee, where we live, is a fast evicting state. Normally, three notices are put in the daily newspaper and then seven days after the final notice, your house is sold on the court house steps. Each state has different laws and timeframes.

You have choices. The first choice you have is forbearance.

Another choice is to refinance your house.

Once you determine you are unable keep the property, you have two foreclosure options. One option is to sell your house or just walk away.

Selling is by far your best of those two foreclosure options. You can keep your credit somewhat intact. One possibility is using a short sale by getting the bank to accept less money than what is owed.

If you contact a realtor to sell your house, most long time realtors will look at your bank’s monthly statement, the amount owed and add the appropriate charges to make the sale.

Traditionally, this would be approximately 8% to 9%. The typical realtor will look at the amount owed, add the fees and commissions and any monies above this amount is the profit for the seller. The problem is IF the property was purchased within the last several years, you probably paid too much. Therefore, the seller is financially disadvantaged.

There are companies that work with banks to help you stay in the house. If anyone comes to your door or calls saying they are from your current mortgage company, listen to them. Never stick your head in the sand!

The banks really do not want the property back and will work with you to keep it. However, you will not find them to be overly friendly.

Also, never pay any fees up front to anyone that promises to fix your problems and are not directly connected to the bank. There are scam artists that will play on your emotions and cheat you out or your money. So, be careful!!

There are foreclosure options if you are an investor and on the other side of this scenario. You know, looking for a discounted property but, not like the ones you see advertised on TV. You know the ones, “buy it for pennies on the dollar”. 82% of what is owed is the typical sale amount for FHA. VA is 88% of what the house is worth. Not what you paid for it. What it is worth!

Conventional loans are all over the board. The lowest I have ever seen is 62%. Not the “pennies on the dollar.”

Then, another one of the foreclosure options is buying a house on the courthouse steps auction where a property is normally sold for what is owed. People do not want to pay what is owed and the bank ends up keeping the property.

This is where it gets messy because the bank then has to bring in a management company to manage the property, pay to clean out the property, re-key it, mow the lawn, maintain the property fees, as well as any repair fees to keep the property from additional damage. Then bring a realtor on board to get rid of the place. These sales are typically AS-IS. There is no negotiating to fix anything. The bank just wants to cut their losses and get out.

Some banks will give the properties back to the investors that bought them in package deals. Most of these investors do not maintain the properties hoping the value will go up relatively fast thereby reducing any additional losses. These properties just sit and deteriorate.

The many different departments in a bank do no communicate with each other. I have had short sale offers accepted AFTER the property has been placed in foreclosure. The collections person you are dealing with probably does not own a home, works long hours and does not make much money. This is a high stress job and burnouts are frequent. Because of this, they do not get back to you quickly. You have to be pro-active.

Bankruptcy Protection

Beware of Foreclosure Scams

Forbearance

Refinance Your House

Selling Your House

Short Sale

An Upside Down Mortgage and Remodeling

Foreclosure Options to Home Page